Forex prices are made by countless millions of opinions which all come together, to make a price and being humans, we don't think logically we are influenced by our emotions and this leads into our first fact on Forex price movement.
Fact 1. Price Movement is Un Predictable
Those people who think you can predict currency prices in advance are wrong; if you try and predict highs and lows in advance your hoping or guessing and that won't get you far in Forex. Its obvious prices can't be predicted in advance because if they could there would be no market, as we would all know the price in advance.
The fact you can't predict in advance doesn't mean you can't win - you can but you must trade confirmation of a change in price and we will explain how to do this later but now, let's look at one of the most popular ways to trade Forex which causes losses.
Fact 2. Predictive Computer Programs Don't Work
You see lots of cheap Forex software which claim they use mathematics to predict price movement but if markets are not predictable, using mathematics is of little or no use.
Most of these systems are back tested ( check out the disclaimer and you will see the word simulation on the track record) and the system is simply bent to fit the data. When trading forward though they lose, as Forex prices never repeat exactly the same way again.
Using a cheap Forex robot is a guaranteed way to lose money.
Fact 3. Volatility in the short Term is Random
All short term price moves are random and support and resistance levels are not valid in periods of minutes or hours. If you try and scalp or day trade, the odds are against you and you will lose. Always look longer term, where you can get the odds on your side and forget short term trading.
Fact 4. Forex Trading is a market of Odds NOT Certainties
You will have losers in an odds market but that's fine, if you focus on high odds set ups and cut your losers quickly and run your profits, you can make a lot of money.
Some of the most successful traders are ex poker players and you need similar skills to win at Forex. In poker, the successful poker player focuses on high odds hands and bets on them and passes by low odds hands or folds - you should do exactly the same in Forex.
If you trade long term and you have the discipline to keep your losses under control and run your profits, you can make a lot of money.
Play the Odds and Win
Perfection and prediction are a myth, there is nothing wrong with taking losses short term, if you make huge long term gains so forget perfection and being right all the time and focus on making huge long term gains by simply trading the odds.
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