Professional traders engage in systematic Forex charting for two reasons. The first is to spot telltale signs of impending market changes. The other reason for systematic Forex charting simply has to do with telling the forest from the trees. We wrote recently about Forex charting with candlesticks. And quite a while back we wrote about following Forex currency rates and keeping things in perspective while trading. The point of systematic Forex charting is to balance the act of trading in a volatile market with a view of the larger market and longer term. With forests, trees and Forex profits in mind let us first consider Forex fundamentals and the larger view for systematic Forex charting.
Knowing Where the Forex Train Is Going
Trend trading is a time honored way to make money in trading currencies. Traders make money by trading within established channels. Using tools like Japanese Candlesticks, traders profit from quick and not always expected market reversals. However, the market has fundamentals and the fundamentals always determine where the market will end up. Having a clear sense of how one currency will eventually trade against another is a key to making repeatedly profitable trades. Professional traders follow the ups and downs of the market but the pros know where things will end up and this gives them a more accurate picture of how prices will evolve. Our comparison to taking a train is appropriate. If you know that the Ruble will likely suffer persistently because of Russian action in the Ukraine you know how to make your trades over the long term. The Forex response to violence in the Ukraine and the subsequent Russian appropriation of the Crimea is a case in point. Knowing where the train of events is going is crucial to long term Forex profits. That is the point of long term systematic Forex charting.
Watching the Road Signs
Anyone who has driven a mountain highway knows that it is a smart thing to watch the road signs and adjust speed for curves and steep grades. This is really how technical Forex trading works. There are signs that tell the Forex trader when to buy, when to sell and when to stay out of the market. The fact is that trading patterns repeat themselves and by systematic Forex charting one can spot these signs, trade accordingly and make a profit. Using the curves on mountain highway analogy again, watching trading signals also helps keep you from driving off the Forex highway and incurring huge losses. Systematic Forex charting keeps you in touch with how the market is doing and helps keep you from losing your trading capital while you are out seeking profits.
Practice, Practice, Practice
A man gets lost in New York City on his way a concert at Carnegie Hall. He happens across a man selling pencils and asks how can I get to Carnegie Hall? The man’s answer is, practice, practice, and practice. Systematic Forex charting is sort of like practicing. It keeps you in touch with the market and your trades. It helps you hone your trading skills and keeping touch with the long view.