A Simple Tip to Increase Your Profits in Forex Trading

Many choose to ignore this simple tip, but if you include it in your trading plan, you will see your profits increase.

You have to trade with price momentum. Many forex traders choose to predict where the prices will go, but the thing to remember is to trade based on the facts. Look at the shifts in price momentum, and that will lead you to where the prices may really go.

One common error beginners make is buying dips to support and use trend lines, or moving averages. When prices go near the support levels, they buy into the support and hope. Relying on hope is a big mistake. Looking at price momentum is the correct thing to do.

Watching prices come into support and turn back up away from it is the time to take a position, as odds are in your favour. Most traders find this difficult to do, as they don’t like missing a move by waiting, but this is the only way to get the odds on your side. You can never know whether support will hold or break, and acting on a guess will most certainly make you lose. Looking at price momentum, on the other hand, is acting on confirmation. Being patient and having a good discipline by acting on confirmation will most likely improve your chances as forex trader.

The best indicator is the stochastic indicator, as it graphically shows the shifts in price momentum. Combining it with the Relative Strength Index (RSI) will give you better chances. Only trade when price momentum points the same way as your trade.