Ok, now we have a general outline of what we are trying to do. We have a simple system that shows us the trend which is solid enough not to confuse us with frequent crossovers this way and that. The crossover of the 2 MAs happens once every 6 mnths or so which means that it is a reliable indicator of the trend. So, now, all that we have to do is ride the trend. One of the age old adages in trading is that the trend is your friend. So, we have a friend with us. We just need to ensure that we get along with our new friend so that he doesnt lead us to trading death.
Unlike other analysts, who love to teach you systems which worked 1 year back and tell you about how they made lots of profits a year back, we will learn by a live example. As i showed yesterday, the EURUSD daily SMA cross over happened a few days back. This crossover indicated an uptrend. Nothing much has happened since and price has been ranging ever since. All of us are in the same page. I am as blind as you because even i do not know what is going to happen next. As i said, i am not going to boast about what i did or did not do last year, as many others do. No one can predict what is going to happen next in forex trading. If someone says that he can, he is lying. Period. We all are blind bats. We navigate our way by trying to sense what is ahead of us, just like a bat.
The difference between a great trader and a bad one is not in the strategy that he uses, it is in the way he uses the strategy, combined with his money management. As i said, we are all blind as far as what is going to happen next. Just because we had a crossover which indicates an uptrend, i am not going to promise you that we are going up. We have indications of price going up but as always, we will prepare for all eventualities.
So, now that we have an indication that price may be going up, first thing that you need to do is to trust the system that you have at hand. Block out everything else. This is one of the biggest challenges that a trader faces. I will discuss this in detail in the next post.
Unlike other analysts, who love to teach you systems which worked 1 year back and tell you about how they made lots of profits a year back, we will learn by a live example. As i showed yesterday, the EURUSD daily SMA cross over happened a few days back. This crossover indicated an uptrend. Nothing much has happened since and price has been ranging ever since. All of us are in the same page. I am as blind as you because even i do not know what is going to happen next. As i said, i am not going to boast about what i did or did not do last year, as many others do. No one can predict what is going to happen next in forex trading. If someone says that he can, he is lying. Period. We all are blind bats. We navigate our way by trying to sense what is ahead of us, just like a bat.
The difference between a great trader and a bad one is not in the strategy that he uses, it is in the way he uses the strategy, combined with his money management. As i said, we are all blind as far as what is going to happen next. Just because we had a crossover which indicates an uptrend, i am not going to promise you that we are going up. We have indications of price going up but as always, we will prepare for all eventualities.
So, now that we have an indication that price may be going up, first thing that you need to do is to trust the system that you have at hand. Block out everything else. This is one of the biggest challenges that a trader faces. I will discuss this in detail in the next post.
