What is the perfect chart set up in Forex trading which has a higher odds of success ,than any other formation and is there really, one set up which is better than any other? In this article we will look at the myth, of the perfect chart set up.
Lets go in search of the perfect chart set and there is no better place to start than the huge industry in Forex automated robots, Expert Advisors or beat the market courses which come out week after week and make countless millions, in profit for the vendors selling them but do they traders buying these automated systems and advice, from get rich quick guru's make Forex profits – let's take a look and see.
The Myth of the Perfect Chart Set Up
If you look online and your a beginner you will be looking for courses and systems sold online which can help you get an edge in your quest for currency trading success and you will find many trading strategies and systems which have discovered some code in market movement which means they can spot a chart set up which is better than any other and many will claim it is the perfect chart set up for profits with little or no chance of losses – so how true are these claims?
There not true at all of course and the perfect or best chart set up in currencies simply doesn't exist.
The Best Chart Set Up Changes ALL The Time
The best chart set up in any currency pairs is subjective and changes all the time and this is because, the markets are in a continual state of change. Forex markets are always changing and the set up which was great in a particular currency pair one week ago, on a trading strategy, can produce a loss on the next trade. The movement of price in terms of – direction, velocity and degree of volatility, even on similar looking char set ups can be very different.
All Chart Set Ups Are Equal in Terms of Profit and Loss Potential
My own view is that chart set ups are all the same in terms of risk reward providing they have been generated by the rules of your trading strategy. The markets are unpredictable, you are only trading a set up in terms of probability and therefore, any trading signal has the potential to lose or make money. If you are looking for a break from a trading range and one range is several months and one is several weeks in theory will make the break from the longer lasting congestion period, a better trading signal but does that mean it will work? No either can be right or wrong and you need to keep this in mind when trading signals with your strategy or system.
The Best Looking Chart Set Ups Often Turn Out to be Losers
Many traders make the mistake of seeing what they consider a can't lose trading set up and risking to much money on it but from my own experience the trades that look best in terms of a chart formation very often are the worst – they give you an instant loss, as prices do the exact opposite to what you think they are going to do. The reason for this is - the chart formation is obvious to you and therefore, obvious to just about every other technical trader and the view of the majority, when trading currencies is normally wrong. If you see a trade set on your charts and its obvious, always ask yourself this question – is it such an obvious set up, that its obviously wrong? In most cases if you examine the trade from a chart formation, the conditions and sentiment behind it, you will come to the conclusion, that its probably to obvious to everyone else as well as you to make money from it.
The Chart Set Up is Right BUT Your Stop Loss is Wrong
How often do you trade a nice set up in a currency pair, get your trading signal in, prices get volatile, then hit your stop and then, going roaring back in the direction, you assumed price would go but your now sitting on the sidelines with a loss, because your stop loss got hit, before prices went in the direction you anticipated? This has happened to me countless times, probably has happened to you at some point and just about every other trader in the Forex market.
Seeing a chart formation which can make money is very often easy but placing your stop order, so you have a balance between protecting your account equity and allowing for volatility is very hard and I would actually say, this is one of the major challenges of Forex trading. You can spot the chart formation but making profits from it can be a little harder, as you have to decide a cut off point. Put it to close and you will get hit and to far away, means, you will have to much risk so getting this balance right, is one of the keys to trading success and we have discussed placing trading signals, with an offsetting stop, in greater detail in other areas of this site.
The Major Currency Chart Lessons to Learn from the Above Are:
There is no perfect chart set up Which is Better than Any other.
The Best chart set Ups vary All the Time and are also Subjective.
Chart Set ups Which are Obvious Are Often Wrong.
The entry and Stop Loss are More Important than the Chart Formation in Terms of Profit Potential.
Any Formation can be wrong footed by the Market Regardless of how good it looks.
So my final words would be – use Forex charts there a great way to make money but they are just a way of playing the odds and you need to trade all formations assuming a loss and pay careful attention to your stop loss because volatility is very often, the major criteria in whether you make profits or losses from your charts. If you play the odds with a logical trading strategy which has an edge, you will enjoy currency trading success – perfection is not possible making money is so good luck and may the odds be with you.