Trading the Aussie Dollar, will it go higher or lower? In part two of the series, Andrew Barnett looks into technical patterns.
In part one we spoke about how important it is to understand what drives the market and the fundamentals that move the Aussie dollar. In part two we are going to talk about the technical aspect and how important it is to use technical patterns professionally.
Here is a scenario that I hear all the time from amateur traders. "I entered my trade based on my system, I put the stop loss in place just above the swing high and last time I put it just below the swing low and the market came and took out my stop loss both times and then reversed and went in the direction I thought it would." Ever had that happen to you? I bet if you just trade technically you've probably had it happen a number of times.
The point I want to make here is that it doesn't matter what technical system you use, Fib's, trend lines, Gann, Elliot Wave, Candle Stick Charts, Ichimoku or whatever, amateurs always put their stops in the same place. The market movers know this and while you are the anticipating the market to rally, they are often selling into the really of the amateurs and price where the volume is, right at your stop loss where everyone else has theirs. One of the very first things I will tell you as a new trader is do not put your stop loss where it looks an obvious place to put it. Put it will out of the way of the market and not just above the swing high or a swing low.Read more