Forex Trading Money Making | Trend anticipation | Technical Analysis #1

Welcome back, traders and true believers of Forex Trading.

Welcome to the McDuck trading family.

In our last post, we discussed the basics of the Economic calendar as a part of fundamental analysis, if you missed it make sure to check it out!

Technical analysis is a useful tool which allows a trader to anticipate certain market activity before it takes place.

These anticipations are derived from previous chart trends, probabilities of other market condition and previous experience of a trader. Over time, anticipation will remove the need to over-analyze the direction of the market as well as recognise consistent, rational areas of interest. It's not as hard as it should seem. Read on to learn how to predict and follow the course of a business trend to a profit.

Anticipation and prediction

Technical analysis methods are often referred to as a type of black magic used to time the market. What those outside the trading community do not know, though, is that the traders are not trying to predict the future. Instead, they build approaches with a high likelihood of success — situations where a pattern or market change can be expected.

Let's face it; if traders could reliably choose tops and bottoms, they'd be spending more time out in a Porsche 911 enjoying a nice stretch of highway than they 'd be hunching over their computer screen. In the past, many of you have already tried to pick tops and bottoms, and are in the game now. Maybe you are already following in the footsteps of many professional traders who are trying to find situations where they can anticipate a move and then take a portion of that move when the setups take place.

The power of anticipation

You probably have your own strategies for entering and exiting the market when deciding whether to do a trade or not. (If you don't, you should decide on them before pressing the buy/sell button.) Technical traders use other tools such as the Moveable Average Convergence Divergence (MACD), the Relative Strength Index (RSI), stochastics or the Commodity Channel Index (CCI), together with identifiable chart trends that have occurred in the past with a certain calculated outcome. No matter if you are a novice or an experienced trader you can use trading signals from websites such as Tool Trades, as they have already incorporated many technical methods into their system.

Experienced traders are likely to get a good idea of what the outcome of the trade will be while it plays out. If the trade goes against them as soon as they enter, and it doesn't turn around within the next few candlesticks, the odds are that their analysis wasn't correct. If the trade does go in their favour within the next few candlesticks, however, they can start looking at moving the stops up to lock in gains as the position plays.

Through tracking the trade(s) in real-time and adapting accordingly, we make sure that feelings can't get us distracted and cause a deviation from the initial schedule. Our strategy arose before the position was taken (and therefore had no conflict of interest), and when the trade is active, we use that to look back at it. Since we already have a strategy that involves no emotion, during the heat of battle we will do as much as possible to stick to that strategy. Make a point of reducing emotion but not eliminating it entirely. You're just human, after all, and it's almost impossible for most traders to trade like a robot, no matter how good they are.

The picture was taken from ToolsTrades.com

Therefore, from using the aforementioned chart, you can see where the signals obviously did and did not work, depending on the market behaviour of each bar and its relationship to the moving averages. The trick is to take care of your trades and consistently operate on the basis of your business strategy.

Objectivity is essential to trading survival. Technical analysis provides many views of anticipation in a clear and concise manner, but as with everything else in life, it doesn't provide a guarantee of success. However, by sticking to a trading plan day in and day out, our emotions are minimized and we can greatly increase the probability of making a winning trade. With time and experience, you can learn to anticipate the direction of your trades and improve your chances of achieving better returns.

That is everything for today, feel free to check out the video below on this topic, stay safe and I will see you soon with more tips and tricks, trading signals and guidelines for Forex trading!

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