Let me elaborate a bit more on that somewhat cryptic opening paragraph. Have you ever realized that the more you dwell on something and try to “force” it, the harder it becomes to obtain? We see this all the time in human relationships; the more you try to control someone to “fit” to what you want, the further away you push them, generally speaking. Whereas, if you just let things “flow” naturally you would be much more likely to achieve your desire with a lot less stress and effort.

This is also true with Forex trading; traders tend to try and “control” the market by forcing trades when there isn’t anything there to trade or by over-leveraging their accounts, meddling with stops / targets after entering, or a whole host of other “unforced errors” if you will. Let’s look at 5 quick tips to get your trading on track and in the realm of relaxed and confident instead of stressed and worried…

1) Be realistic…stop hoping

The first thing you need to do if you want to become a master Forex trader, is become realistic about how much money you can make given the amount of money you have available to trade with and the fact that you must practice proper risk management if you want to succeed long-term. If you intend on managing your trading account money properly, and you have a relatively small account, you simply aren’t going to “get rich quick” or be able to quit your day job any time soon. The more you accept this, the easier trading will become because you won’t feel any “pressure” to make money fast.

2) Trade the daily charts

One of the most prevalent ways that struggling Forex traders try to force their will upon the market is by trading low time frames. I consider anything under the 1 hour time frame to be “too low” to be worth trading. Some people will disagree with me, and that’s fine, I can only say what has worked for me over the years, and that’s focusing on the daily charts. Trade setups are more accurate and more relevant the higher up in time frame you go. I found by focusing on the daily charts and trading less, my trading improved significantly, you just have to have more patience. Slow and steady wins the Forex race.

3) Understand less is more

This point goes along with trading higher time frames, but it’s worth discussing on its own because many traders over-trade and over-analyze market variables. There really is no need to read every economic report and figure out how it may or may not affect the market. All you really need is a simple yet effective Forex trading strategy along with proper trading psychology to make money in forex. There really is no need to over-trade, over-analyze, or generally over-complicate the market. You can trade effectively with simple Forex trading strategies that do not rely heavily on indicators or trading software.

4) Plan and track

Planning and tracking your trades with a Forex trading plan and a Forex trading journal is essential to maintain and sustain the proper forex trading psychology. Most traders simply do not have the proper trading mindset right out of the gate, so it’s necessary to pre-empt your trading approach by creating a trading plan in order to eliminate the possibility of emotional trading BEFORE you enter the market. Trading journals keep you on track and keep you accountable; they are essential for seeing how your discipline pays off over time and creating a track record for you to prove your ability as a trader if you want to get people to fund you.

5) Know what you’re looking for…without a doubt

The last tip to help you become a calm and confident “master” trader is to truly master a trading strategy so that you know without a doubt what you are looking for in the market every time you open up your charts. You should have your Forex trading strategy mastered to the point where you can open the daily charts and analyze the major Forex pairs for about 20 minutes a day and either place a trade or walk away with confidence. In essence, you should have your trading strategy mastered to the point of knowing very quickly whether or not your high-probability trading edge is present, if you have to sit and stare at the charts for hours each day, you either don’t know what you are looking for or have not yet mastered a truly effective forex trading strategy.

• Starting from the right mindset…

One of the biggest issues that cause many traders to trade from the wrong mindset is starting with the wrong expectations and being unrealistic about their trading goals. Put simply, if you are starting out with $1,000 in your trading account, you simply are not going to turn that into enough money to live off of any time soon. Most traders begin trading with an urgency to make money or a feeling of “needing” to make money in the markets. When you start trading from this mindset, it basically seals your fate as an emotional trader, which means you will undoubtedly lose money in the end.

So, before you start trading with real money, stop and make sure you are not trading to “get rich quick” or have unrealistic expectations about how much money you can make given what you have to trade with. Also, be sure to only trade with truly disposable income, if you need your trading money for anything else, you will inevitably become emotionally attached to every trade you take and thus you will fail. If you are a beginning trader you have the advantage of learning from good free forex trading material like this website and others, so use this insight wisely and don’t commit the common mistakes most traders do.

• Forex trading psychology as the “glue” of your Forex trading strategy…

The one thing that clearly separates the winning traders from the losers is a difference in trading psychology. We can think of psychology as the “glue” that holds everything together for a trader. If you don’t pay attention to your mindset and controlling your emotions as you trade the market, you will inevitably end up over-trading and over-leveraging your trading account. The best forex system in the world will be nothing without the proper trader psychology. Many traders overlook this fact and they then wonder why they can pick the market direction accurately most of the time but still seem to lose money over the long-run. It is because they do not practice proper trading habits that lead to the correct trading psychology. If you want to maintain the correct trading psychology in order to hold together your forex trading strategy, you need to work on developing the correct trading habits and reinforcing them instead of the negative ones like over-trading and over-leveraging.

• Keep it simple…

Perhaps one of the easiest and most effective things you can do to harvest and maintain the proper Forex trading psychology is to simplify all aspects of your trading. From the particular forex system you use to the amount of time you spend in front of your charts, if you make everything as simple as possible you will be less likely to over-analyze and second-guess yourself, avoiding these pitfalls is very important for developing and maintaining the proper trading mindset. Indeed, simple forex trading will have a very positive effect on your overall trading psychology, and if you are using a complicated trading strategy; one that is heavy on indicators or based entirely on trading software, you should consider going back to the basics of technical chart analysis and learn to read the raw price movement of the market.

• What do you need to know about making money in Forex?

The first thing you NEED to know about making money in Forex is that you need to aim to make consistent money, instead of huge gains followed by huge losses. Most traders’ equity curves look like a piece of modern abstract art because they simply don’t manage their risk effectively, they don’t understand risk reward, and they over-trade. This results in periods of large winnings followed by periods of even larger losses, typically this happens until they blow out their trading account. Why does this happen though? The primary reason most trader’s experience these volatile changes in their trading account is because they are trading emotionally. Traders who trade emotionally are not making consistent money because their emotions are not consistent. If you want to make money in Forex you need to constantly be aware of your emotions and make sure your trading routine is consistent and that it reflects your consistent mindset.

• What are the best Forex strategies for making money in Forex?

The best forex strategies to make money with are typically going to be ones that do not confuse you are cause you to second-guess yourself. As I alluded to in the opening paragraph, many traders end up using mechanical Forex trading systems like trading robots and indicator-based systems. Unfortunately, these types of trading systems seem good on the surface but in reality they deliver very little in the way of clarity and effectiveness. What you really need is a forex system or forex trading strategy that is based in simple chart-reading skills. What I am talking about is classic technical chart reading skills and classic technical analysis; the foundation of all technical trading. There are different types of forex trading strategies and systems out there, but generally speaking, simple is always better.

• How do you learn to make money in Forex?

The answer to this question is a bit in-depth. You must first learn how to trade effectively, and you must learn an effective trading strategy that isn’t too complicated. Once you do this, you have to actually learn to manage yourself in a responsible manner in the markets. This means constantly being aware of your emotions and actions, and making a Forex trading plan and keeping a Forex trading journal. Traders who don’t do these things are typically going to lose money, sooner or later. The best way to learn how to trade the markets is to obtain training and guidance from an experienced and successful Forex trading mentor, just as learning any other skill or profession is best learned from a mentor as well.

The first step to finding the best Forex trading system for you is to ask yourself a series of questions, this will give you some insight into what you should be looking for in a Forex system. You need to ask yourself how much time you have to dedicate to the markets. If you are a busy professional with a 9 to 5 full-time job, you will probably want to trade “end of day” trading strategies and learn to trade off the daily chart first. Even if you have more time on your hands you may still want to stick to trading off the daily charts, at least at first, as they provide an excellent view of the market that is both clear and pertinent. The lower time frames can sometimes confuse beginning traders and cause them to over-trade due to the larger amounts of market “noise” and insignificant price movement that occurs.

The next thing you will need to ask about any potential Forex system you are thinking about trading is, “does it give me a straight forward and truly effective way to analyze and trade the market?” Many Forex trading systems are nothing but trading robots that cost too much money and aren’t effective in changing market conditions or over the long-run. There are also a lot of indicator-based trading systems that just end up confusing traders and cause them to over-trade. What you want to look for is a currency trading system that actually teaches you how to think about price movement and gives you a strategy for learning to trade for yourself for the rest of your life, rather than just learning to blindly enter off mechanical trading rules. The Forex market is dynamic and ever-changing, so you need an effective trading system that will allow you to take advantage of this fact, no matter what the market is doing.

• Step 2: Be realistic

When trying to find the best Forex system it is important to not become a victim of hype or big claims. You will probably run into many websites that imply that by simply buying their Forex trading product you will make a lot of money. The truth of the matter is that there is no Forex trading system out there that will magically make you money. You have to use it correctly, and this means really learning and mastering it and not over-trading or risking too much. Most aspiring Fx traders fail at this, especially at the whole not over-trading or risking to much part. The point is that even the best currency trading system in the world will not make you money if you do not use it properly, or if you abuse it.

In my opinion, learning to trade a clear and clean price chart is the best way to go. There are simple yet effective and repetitive price action patterns that repeat themselves on a periodic basis in the market. If you can learn to identify these patterns and trade them with discipline, you will have a very effective, clean, and concise Forex trading strategy, and this in my opinion is the best Forex trading system.

The “big secret” (if you want to call it that) of Forex trading success, is that you don’t have to use indicators or fancy sounding and looking Forex trading software to effectively analyze and trade the market. That’s right; you really don’t need any of that stuff. Everything you need to make high-probability trades is available on a plain vanilla price chart.

What I am talking about here is pure price action trading. This involves combining support and resistance levels, price bar patterns, and a simple understanding of Forex market mechanics. You see, all variables in the market are reflected through price. So, when you learn to trade price action, you are really learning the best Forex strategy.

3 Easy Steps to Simplify Your Forex Trading:

1) Clean up your charts – You will need to keep your Forex charts clean if you want to simplify your Forex trading. This means learning to trade without indicators. There are very few indicators worth using, you can learn to employ moving averages for identification of dynamic support and resistance, and for trend analysis, but outside of this you are not going to gain any advantage from plastering a bunch of messy lines all over your charts. So, start by cleaning up your charts and learning to trade with simple and clean price action strategies.

2) Clean up your mind – Having the correct Forex trading mindset is essential to simplifying your trading and removing the stress. You will be on the right track to obtaining the correct trading mindset after you follow step 1 and remove the clutter from your charts. However, you also must be realistic about how much money you can expect to make given what you have available to fund your trading account with, and you must also learn how to be patient and disciplined.

3) Stop over-analyzing – Many aspiring Forex traders spend far too much time sitting in front of their computers starring at the charts. You should learn how to trade off the daily charts first. Trading the daily charts allows you to get a clear view of the price action in a market and it also acts to filter out the “noise” of the lower time frames. A general rule of thumb is that the higher the time frame, the more accurate the trade setup. This is because higher time frames show a more pertinent view of what is happening in a market than a lower time frame. So, by learning to trade the daily charts you can spend less time analyzing the markets and improve your overall trading accuracy. Not to mention it is a lot less stressful than trying to trade a 30 minute chart for example.

In closing, if you want to simplify your trading you need to remove variables, not add them like so many traders do. Markets reflect all variables via price action, so if you can learn to trade off price action you are trading off the purest and most relevant data a market can provide. However, you should not haphazardly teach yourself how to trade, it is best to get solid price action instruction from an experienced professional via a truly effective Forex course.

• How to calculate the risk reward on any Forex trade:

1. First off, you need to figure out where you will place your stop loss. Stop loss placement is very important and you should choose the most logical position for your stop loss based on the current market conditions and market structure. For example, in a volatile market you are likely to need a larger stop loss than you will in a quieter market. Also, be sure to take into account any nearby support or resistance levels when placing your stop loss. These levels can be great “natural” barriers to place your stop beyond. Essentially, when pick your stop loss level, do NOT pick it based on the position size you want to trade, instead you need to pick it based on the most logical and “safe” place to give your trade maximum room to breathe.

2. Next, you need to figure out whether or not a profit of at least 2 times risk is possible. This part can be a bit more difficult because it’s very easy to make up all kinds of reasons for why any particular trade just “has to” go a certain distance in the market. But, you should again take into consideration things like current market conditions, and market structure (support and resistance levels) when figuring the potential reward in a trade, just as you would in figuring a potential stop loss.

However, this is not an exact science by any means. If you have truly mastered your Forex trading strategy and you think it’s the best forex strategy, you should know exactly what type of setup you are looking for in the market. You can then make sure you only take A+ trade setups in order to give yourself the best chance of making money in Forex. Taking only A+ setups will help you reach your rewards easier simply because an A+ setup has a better chance of working out in your favor than a B or C setup. But, you have to make sure you really KNOW what an A+ trade setup looks like. This is a result of obtaining an effective Forex trading education on a truly effective trading strategy and from a truly effective and genuine Forex trading mentor.

• Conclusion

If you are not currently calculating the risk reward on each trade you take, you need to be. This needs to be done prior to entering a trade. It will help you think about the market in probabilities, learning to think in probabilities is key to becoming a profitable trader.

• Mechanical Rule-Based Forex Systems

Forex trading systems built off indicators are usually mechanical and rule-based. This means the designers of the system have set specific rules for entering and exiting based off some formation or “signal” generally produced by two or more indicators.

The main problem with mechanical Forex trading systems that are built on indicators is that they can be very difficult to interpret and downright confusing. Also, a rigid set of trading rules will not work in all market conditions. The Forex market ebbs and flows and is very dynamic. Therefore, trying to “define” it with a set of rules is quite futile.

• Forex Trading Robots / trading software

Forex trading “robots” are very popular on the internet these days. Many programmers are designing trading systems that can be fully automated using Metatrader 4 or 5. The appeal of these Forex trading robots is that they claim to eliminate the potential for human emotional error by fully automating the trading process. There are a couple problems with this claim however.

First off, the human trader is still technically “in control”; they can very easily over-ride the trading software and trade based on some idea they have or some other strategy. So, the problem of human discipline is still there; you still have to be disciplined to actually follow the system and not deviate from it, many traders have just as much trouble with this as they do with being disciplined to manage risk or not over trade. Also, Forex trading robots vs. the human mind is an interesting concept. A piece of trading software is inflexible and not adaptable to changing marketing conditions; a computer program can only do what it is programmed to do. So, be careful with trading robots and trading software, they are very easy to market and to hype up, but they rarely, if ever, deliver on the bold claims they make.

• Discretionary strategies

There are many discretionary Forex trading strategies that traders use to analyze and trade the market with. These typically consist of “classic” technical analysis techniques like basic chart patterns, candlestick analysis, Forex breakout strategies, trend-following strategies, Forex trend line trading strategy, Forex Fibonacci 50% trading strategy, support and resistance Forex strategies, and more.

These discretionary strategies can work, but they take a lot of practice and, well, discretion. They are more of a trading “tool” that can compliment an actual Forex trading strategy than they are actual trading strategies in and of themselves. Still, they are worth understanding, so be sure you click the links above and read about them.

• Price Action Strategies

Finally, perhaps the best Forex trading strategy is price action trading. Using simple price action trading setups, you can build a comprehensive Forex trading strategy that will allow you to make sense out of the dynamic and ever-changing Forex market, no matter what condition the market is in. This is a key distinction between price action and mechanical trading systems and trading software; price action is flexible and adaptable, while many other strategies and systems are not.

The other big advantage of trading with price action strategies is that it is a very clean way to trade the market. You don’t have a bunch of confusing and messy lagging indicators all over your charts. Instead you can learn to trade effectively off a handful of easily identifiable and high-probability price action setups on nothing but a plain vanilla price chart. Combining these price action strategies with some of the discretionary trading strategies discussed above can be a very potent and efficient way to trade the Forex market. To learn more about price action trading and how to trade the Forex market with simple price action strategies click here: Forex price action trading videos.

The truth of the matter is that you do not need to have a hundred different indicators on your charts, or any indicators at all for that matter. You can learn to trade the Forex market off pure price action analysis, this means trading the market based off the “core” data of price movement. You can learn to trade based off price action through many effective mediums; Forex trading videos, Forex trading articles, Forex price action courses, and more. There really is no reason to confuse yourself or clutter up your charts with indicators and other unnecessary “bells and whistles”, when you can simply learn to tread the “raw” price action without any obstructions or distractions.

If you are looking for a comprehensive price action trading education taught by a pro trader and mentor, check out Nial Fuller, you should check out his Forex trading course and price action trading education website. There is a ton of good free Forex trading information over at his website that you can learn to profit with price action from. The vast library of videos and trading articles will surely keep you occupied for at least a few weeks while you learn the simplicity and effectiveness of price action Forex trading.

After you gain a solid foundational understanding of price action Forex trading via Nial’s free Forex trading material, you will then have a good idea of whether or not you want to take your price action trading education to the next level by taking his Pro Forex Trading Course and joining his price action trader’s community.

Most any Nial Fuller review that you encounter on the internet will speak to the benefits of his price action trading education system and the enriching interaction that takes place between member’s in his forum. The email support that Nial offers is also highly acclaimed. All of this goes to show that you can learn to trade the markets without indicators or expensive Forex trading robots. These things are simply unnecessary and until or unless you realize and accept this fact, you are probably going to lose money over the long-run. It’s essential to consistent profitability in the markets that you learn to analyze price action and develop your own discretionary trading skills.

First off let’s discuss exactly how the RSI indicator works:

The RSI is a technical momentum indicator that contrasts the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of a Forex currency pair. The RSI ranges from 0 to 100, an asset is deemed to be overbought once the RSI approaches the 70 level, meaning that it may be getting overvalued and is a good candidate for a pullback. Similarly, if the RSI approaches 30, it is an indication that the asset may be getting oversold and therefore likely to become undervalued.

• The main problem with RSI

Now, the RSI is an oscillating indicator, meaning it oscillates between an A and a B point in an attempt to “predict” market reversals. The obvious and very real problem with such oscillating indicators is that they will produce on-going sell signals if a market is a trending strongly to the upside, and on-going buy signals if a market is trending strongly to the downside. Now, anyone who has been around the markets for a while knows that the most lucrative time to trade is when a market is trending strongly, thus the last thing you want to do is confuse yourself into trying to pick the top or bottom of a strong trend by looking at some indicator like RSI.

• A clear example of RSI vs. Price Action

Let’s take a look at the current daily chart of the EURUSD as of April 1st 2011. We have a standard RSI indicator applied to this chart. There a couple things to discuss here that clearly point to price action being the obvious winner in the battle of RSI vs. Price action.

First off, the market is clearly in an uptrend since early January of this year. Since we want to take chunks out of the trend, because that is the most efficient and effective way to make money in the markets, we should only be considering long trades during an up trending market. Now, if you are a real believer in the RSI, you would be watching as it approached the 70 level, which indicates an “overbought” market, implying you should sell. The problem with the whole notion of “overbought” and “oversold”, is that a market can stay overbought or oversold for a very long time, so you see it’s all relative. Trying to pick tops and bottoms is a loser’s game, and the best way to identify major market turning points is with simple price action setups anyways.

Next, we can see there have been at least two high-quality price action setups that could have gotten you into this trending market over the last few months. If you were aware of what to look for based on simple price dynamics, you would have no desire to confuse yourself with “oscillating” indicators like RSI, Stochastics, or any of the rest of them.

One very popular indicator in the world of Forex trading is the MACD (Moving Average Convergence Divergence). The MACD is a trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the “signal line”, is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.

Price action trading involves learning to analyze a “naked” or indicator-free price chart to make one’s Forex trading decisions. Traders who trade with price action as their primary chart analysis tool enjoy the clutter-free approach that “plain-vanilla” price chart reading brings. Price action traders also enjoy the fact that learning to analyze simple price action setups gives them the power to spot potential moves in the market well before any indicator like MACD produces an entry signal. For these reasons and more, many traders believe price action to be the best Forex strategy .

MACD vs. Price Action

Price action easily wins the battle with MACD when it comes to identifying trending markets and finding high-probability entry points. The primary reason this is so, is because once you know how to identify a trend based on price dynamics, you are basing your trading decision off of “core” market data, instead of the secondary-interpretation provided by MACD.

For example, price action traders identify an uptrend by a series of higher highs and higher lows, and a downtrend by a series of lower highs and lower lows. Once you know how to spot these price action based trend identifiers, it is a very simple thing to look at any market on any time frame and identify whether that market is an uptrend, downtrend, or consolidating. In contrast, if you were relying on MACD to identify trends, you would have no context to base your on-going analysis from, other than whether or not the MACD has risen or fallen above or below the “signal line”.

Furthermore, it is simply unnecessary to try and learn how to identify trends or turning points in markets based on indicators, either alone or in conjunction with price. Price action contains its own clues for trend identification, and it even provides traders with easily identifiable trading setups that they can use to enter the market at times of high probability. So, since you can learn how to analyze a market solely on price action, there really is no need to divert your focus and attention by concentrating on secondary indicators. If you want more information about price action you can check out this price action tutorial video.

In the chart below we can see the daily NZDUSD currency pair with a standard MACD indicator applied. A few things to notice here; first, during the time when the NZDUSD was moving sideways in a trading range, the MACD was absolutely useless and would have caused confusion and indecision, whereas knowledge of simple price action strategies and confluent levels would have provided at least 2-3 excellent entry opportunities.

Next, by knowing how to identify down trends through lower highs and lower lows in price, we could have easily saw this market was starting to trend lower. One glaringly obvious problem is that the MACD moved above the signal line on a slight pullback within price, we then got an obvious bearish inside bar setup with the downtrend while MACD was actually predicting bullish momentum. We can then see price fell off a cliff netting savvy price action traders the possibility to make 3 times risk or more. To learn more about why trading with indicators destroys Forex trading success, click here.