The Simplest Forex Trading Secret

Success with trading isn’t complicated.

It’s simple.

Not easy, but simple.

Too often though, the Shiny Object Syndrome leads us to chase distractions that lead us further away from what we want.

The thrill of something new encourages us to abandon clear thinking and logical reasoning for novelty and excitement.

[info]Shiny Object Syndrome: Constantly allowing new ideas to capture your attention, such that you get distracted from the bigger picture and go off in tangents instead of remaining focused on the goal.[/info]

With so much information available online , it’s natural to want to absorb as much as we can about Forex trading.

After all, the more we know, the better… right?

Complex trading approaches should yield better results… right?


Well…. nope, not really.

I’ve learned (the hard way) that the complexity of a trading method has absolutely no bearing on how effective it is. In fact, my past experience with dozens of trading methods leads me to conclude that the more complex a trading method is, the poorer it performs (for retail traders, at least).

I’ve found that when it comes to trading, simplicity is almost always better.

And simplicity is often based on the blindingly obvious.

Observing The Obvious

When you look at a price chart, what’s obvious to you?


What’s obvious here is that prices tend to move in one general direction for a sustained period of time:

And since we know that we can only make money when prices move in one particular direction, doesn’t it make sense to trade price trends rather than price ranges?

If anything, the risk-reward of trend trading is much better than range trading.

And in that case… wouldn’t it also make sense to only trade currency pairs that trend most of the time? Because, well, not all of them do.

So in observing the obvious, we are essentially picking the right battles to be fighting.

We only want to join battles with the highest chance of winning, with the largest payoff.

Anything less will be a waste of time, effort and capital.

Analyzing The Obvious

The next step is then to think about the trading environment we’ll be operating in.

This particular topic has been covered in the Retail Forex Manifesto, so check it out before you proceed.

Action The Obvious

The above steps will then lead you to conclude the type of battles you want to fight, and how to go about fighting them.

…and the last step is to take action based (again) on what is obvious.

Here’s the daily chart of the EUR/USD:

What do you notice about each daily candlestick?

What is something almost all of them have in common?

Hint: it’s a characteristic all of the candles here share, except for one.

Can you see it?

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Ready for the answer?

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You sure?

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Ok…

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The answer is that almost all the daily candles have top and bottom shadows!

“But that’s obvious!”

Exactly!

Now can you think of how to make money with this obvious fact?

Here’s a hint…

If you know that daily candles (almost) always have shadows, and you’re looking to enter an intraday trade… when do you think would be a good time to be looking for trade entries?

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Think about your answer…

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No, really. Stop scrolling and think about your answer.

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Ready?

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The best time for an intraday trade is at the beginning of the trading day, when the (top or bottom) shadow is forming.

This way, if you’re skillful (or lucky) enough, you’d enter a trade at the first shadow of the daily candle, and catch most of the price moves over the rest of the day.

So to illustrate, if you expect today’s daily candle to be bullish, the best time to enter a LONG trade is while the bottom shadow of the daily candle is forming, at the beginning of the trading day.

Does this make sense?

So, Action The Obvious

This is just one example of how to observe, analyze and action the obvious. It’s simple, easy to understand and effective.

Can you think of any other examples where you profit from the obvious?

 

By |2019-04-08T03:34:38+00:00April 8th, 2019|Philosophy|8 Comments

8 Comments

  1. Edward N March 18, 2012 at 5:10 pm - Reply

    Thank’s Chris: You’v tought me a lot about trading with candles.

  2. Ferry D.M. March 26, 2012 at 5:43 am - Reply

    Huge thanks, Chris. It’s an excellent article. I bought your “Candlestick Made Easy” last year; it’s also a remarkable reference to trading with Candlesticks. Keep up the good work.

  3. Ferry D.M. March 26, 2012 at 5:49 am - Reply

    BTW Chris, I’m thinking of buying your Candle Countdown Indicator. Can it be used on more than one MT4 platform?

    • Chris Lee March 27, 2012 at 2:26 am - Reply

      Hey Ferry,

      Thanks for your kind words… I’m glad you liked Candlesticks Made Easy.

      Regarding the Candle Countdown indicator – yes, you can use that on as many platforms as you’d like. There are no restrictions.

      Just place the indicator file into the appropriate MT4 platform and you’ll be able to use it. 🙂

  4. Raymond April 1, 2012 at 2:20 pm - Reply

    A very good article. It teaches how to use the long term charts effectively, and not worry about the 1 hr. or 30 min. charts, nd to make more money easier

  5. Entrepreneur April 14, 2012 at 11:16 am - Reply

    Its like you learn my thoughts! You appear to grasp a lot about this, such as you wrote the e book in it or something. I think that you simply could do with a few p.c. to pressure the message home a bit, however instead of that, this is magnificent blog. A fantastic read. I will definitely be back.

  6. Rishi April 14, 2012 at 3:00 pm - Reply

    Hey how come i never seen this staring at charts all day long! i love this

  7. Nicolas May 10, 2012 at 10:49 pm - Reply

    Good Article! You open my eyes and I will use your method to enter at the best time in the daily candle.
    Just a question : how to be sure to see in realtime the top or the bottom of the candle? Is there an particular hour when this occurs in most case?

    You told in another article that we have to choice pairs with big move. According to you what are these pairs? gbpjpy, audjpy?

    Thank you again…

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