Here’s a video on Forex Trading that covers something I don’t hear many talk about in the currency markets: how to trade cycles. Charts are two-dimensional objects with price on the right axis and time on the bottom axis. Therefore if you leave time, or CYCLES, out of your trading method, you’re ignoring fully 50% of the information available on the chart.
Quick question: How can you establish a probability scenario that’s in your favor if you leave out 50% of the information provided on your chart? Enjoy the video!
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Not only is the element of time (cycles) one half of the equation on a chart. But the famous trader W.D. Gann felt that it was more important than price. Therefore, if he’s correct, it’s more than 50% of the information in importance for forex trading.
My experience with amateur traders who I’ve worked with and trained has confirmed this. Many of them come to me and show me their charts. Inevitably they’re inundated with all types of indicators, and lines and garbage that isn’t necessary for trading.
They’re evidently not aware of the fact of diminishing returns. After you add a certain number of variables, their affect on your trading probabilities lessens.
Now in trading, not only does adding more stuff have lessening affect as you add more and more, but it has a devastating psychological affect that will actually reduce your profitability.
They add all that stuff to their charts to try to get more confirmation in their trading decisions, but what it really does is simply (ironic to use that word in this context) overwhelm their minds.
Therefore not only are they not adding to the probability of success in their trading, they are, in fact, reducing their chances of profitability because they’re becoming overwhelmed and not able to think clearly.
The real irony … even though most amateur traders have way too many indicators on their charts, they rarely have even one reliable timing tool!
References:
Learn about FX, Currency Trading Courses & Lessons | FOREX.com
Learn to trade forex with FOREX.com. We provide online courses and lessons around the currency trading market.
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