Trading with an Edge

Filed under: Learn Forex Trading |

In order to be successful at trading the forex markets, you have to have some kind of market edge. What does this mean? Well, it means that over a long series of trades, that probability will be on your side and that you will come out on top. However, in the short term, anything can happen.

 

In the world of professional sports gambling, punters find an edge that they can exploit from the bookmakers, and keep putting bets on over the long term. For example, a horseracing expert may find that mares are often overpriced in the shorter distances races.  Over a long series of bets, they could exploit this information and turn a profit. However, in the short term, it is merely gambling.

 

This is very much the way it is with forex trading. Any single trade on its own is simply gambling; it is only over a long series of trades that a trader with a market edge can be confident that they will turn a profit. These markets edges can come in a number of different ways. A long term trading system could be a moving average crossover, which sometimes has moderate success. You could also use Bollinger bands, or a whole host of technical indicators to create trading systems that have an edge. However, the best edge that I know of in the forex market is to use price action signals at significant areas of support and resistance.

 

By using price action signals at areas in the market that have been significant in the past, you can ensure that you have a high probability of success over a long series of trades. In the short term, there will be fluctuations in your trading bank. But over the long term, you should see some good profits, providing that you are using good methods of money management and risk-reward.

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