Forex Technical Analysis - 6 Simple Tips For Bigger Profits by Monica Hendrix

Using forex technical analysis can and does help traders make big profits however you have to know how to use it correctly, to achieve currency trading success and that's what this article is all about.

Let's look at six tips to make your forex technical analysis successful. 1. Trade Valid Data

Using technical analysis on forex charts is designed to get the odds in your favour and to trade the odds you need meaningful data. Do NOT day trade - day traders never win as all short term volatility is random.

Either swing trade look for trades that last a week or long term trend follow.

2. Use Weekly and daily charts

Don't just use daily charts - use the weekly chart as well to spot the major trends - remember in currency trading currency trends follow economic cycles and these can last for several years and they are apparent on the weekly chart.

You can then use the daily chart to time your trading signals and entry and exit points.

3. Understand Support and Resistance

All successful forex traders need to understand support and resistance and you want to look for valid levels - These are levels that have been tested several times ( at least 3 ) and preferably in two different time frames.

Try and trade these valid levels and again start with the weekly chart first and see if they line up with the daily levels - these are the very best set ups.

4. Understand Breakout Methodology

While support and resistance can hold they can obviously break as well and it's a fact that many of the major trends in forex trading take place form new market highs NOT market lows.

Many forex traders hate buying new highs as they feel they have missed a bit of the move - while this is true these trends simply accelerate away and you should grit your teeth and enter.

5. Use Momentum to your advantage

So will support or resistance break or hold? You don't know and you should never predict or hope you should use momentum indicators.

Whenever you enter a trade your view should always be supported by price momentum. Two of the best indicators are the stochastic and Relative Strength Index. They will help you time your trades better get the odds on your side and help you make bigger profits.

Never make the major mistake that most traders do in forex technical analysis of trying to trade without momentum if you do you will lose.

6. Keep it simple

Your system should be simple - simple systems work best as they have less elements to break and are more robust in real time trading.

You can trade successfully and make a lot of money just basing your system on the tools we have outlined above.

6. Be Patient and be disciplined

Be patient don't trade for the sake of trading.

Only execute treading signals that your forex technical analysis system generates and don't lose discipline and chase losses or try and hurry profits.

When you have entered a trade maintain discipline and make sure you place a stop and have a realistic target.

Our view of forex technical analysis may strike you as simplistic and it is but after trading for 25 years and trying just about every method out there we have found the above works and makes us money and maybe it can help you to.
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