Trade With Precision Newsletter - Trade With Precision

Successful traders focus on doing the basics well and repeating the process over and over again which provides them with an edge. Amateur traders focus on looking for the next great indicator or the next Holy Grail trading strategy. Which camp would you put yourself in?

If you haven’t already read Part 1 of this series then make sure you do so before reading on. In Part 2 of “Technical Analysis Tips for the Everyday Investor” we want to show you how to read the trend in a product which you may be looking to invest in. By simply reading the trend we believe that you can increase the odds of the investment working out for you. If you can align your fundamental view with a technical view then you’ll be much better off than if these two views are conflicting.

What sets professional traders apart from amateur traders is that professional traders are able to predict price action and trade accordingly instead of continually chasing moves like amateur traders. By predicting price action, these professional traders are able to gain entries into markets before the bulk of the move occurs. In contrast, amateur traders are only drawn to the market after large price moves have occurred and they try to chase the market. By the time amateur traders gain an entry into the market, the professional traders are already unloading their position and ringing the cash register.

There is little doubt that currencies are a very attractive market. The sheer size of it almost guarantees good liquidity and tight spreads. With the huge market size comes volatility which provides us traders with the markets moves and trends we are looking for. So how can you participate in this market? There are three instruments available for trading currencies and while they all allow you to trade the market, their characteristics and associated regulations (or lack thereof) make them quite distinct. So let’s have a look at what instruments are available when we want to trade the EUR/USD currency pair for example.