The A-Z of Forex Trading: Part 3 (M to Q)

Filed under: Learn Forex Trading |

(Continued from yesterday…)

 

Continuing with our A-Z of forex trading, we begin today with the letter M.

 

M… is for Momentum. Momentum is such an important element of forex trading – so much so that there are various technical indicators which measure momentum. Momentum tells us how much steam the market has built up, and what kind of force is present in a move. If we can, we always want to trade with momentum rather than against it. This way, we can ride some of that momentum and gain some nice profits.

 

N… is for Nison! Steve Nison is one of the most important figures in the history of forex trading, because he was the man who single-handedly brought candlestick charts to the west. Candlestick charts tell us so much more about what is happening in the market, and price action trading would be a lot harder without the use of these charts.

 

O… is for Oscillator. Oscillators are technical indicators such as RSI or MACD that tell us if a market is overbought or oversold. They oscillate between two extremes on a graph – hence the name.

 

P… is for Price action. Price action is the most important element of forex trading – more important than any technical indicator, and something that is often overlooked by beginner traders. Price action tells us what is happening right now in the market – whereas indicators are always lagging and only tell us what happened in the past.

 

Q… is for Quitting. Okay – give me a break. “Q” is quite a tough one. However, all too often, people try their hand at trading forex and have big ideas about it, only to quit when they experience their first significant drawdown. Having drawdowns is a part of forex trading. An equity curve is never going to go up in a straight line; and unless you accept that, you are likely to quit at some point.

 

(To be continued…)

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