Forex trading tops and bottoms
After years of talking to my trader friends and other forex fanatics, I noticed a pattern that seems to pop up pretty often when talking about losing trades.
Xavier, a young trader I met at a convention recently. His friends also shorted similar pairs for the same reason.
How to Buy Bottoms and Sell Tops with Confidence - laqenyberegi.web.fc2.com
The promising reward-to-risk ratios alone are too tempting, especially when the setup is supported by major technical levels. Unfortunately, many traders pick tops and bottoms not for fundamental and technical reasons, but for the simple satisfaction of being right. Here are three reasons why you should think twice before trading them:.
Come to think of it, they usually end with the same bloody results at least for your trading account.
Also, the other factors driving the trend sentiment, fundamentals, etc. The subconscious need to be right from picking a top or bottom increases the danger of poor risk management. Even more damaging is the misleading mindset that one can beat the market by pinpointing where exactly it will turn.
This causes many traders to veer from their trading plans by placing tighter-than-usual stops and failing to let their profits run. Although there are instances when both fundamental and technical analysis hint at a reversal, there will never be a guarantee where EXACTLY the market will turn.
Not giving your trade enough breathing room for such potential reversals could be damaging to your account in the long run.
The 2 Best Trading Methods For Picking Tops And Bottoms Of Prices (Market) | Forex Trading Strategies
This is also probably why some seasoned traders caution against picking tops or bottoms. With a lot of experience, and after doing your homework, picking tops and bottoms is just as good as any trading technique as long as you ALWAYS remember to practice proper risk management and give your trade enough leeway in case the market reverses a bit farther away from your predicted turning point.
Forex strategies
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Tops and Bottoms: A Trader's Guide
My goal is to share practical advice to improve your forex psychology without boring you to death. Hopefully, you can develop the mental edge you need to become the best trader you can be. Privacy Policy Risk Disclosure Terms of Use.