TAILIEUCHUNG - Avoiding mistakes in forex trading

Adifficult challenge facing a trader, and particularly those trading e-forex, is finding perspective. Achieving that in markets with regular hours is hard enough, but with forex, where prices are moving 24 hours a day, seven days a week, it is exceptionally laborious. | FOREX TRADER Avoiding mistakes in forex trading By Abe Cofnas A difficult challenge facing a trader and particularly those trading e-forex is finding perspective. Achieving that in markets with regular hours is hard enough but with forex where prices are moving 24 hours a day seven days a week it is exceptionally laborious. When inundated with constantly shifting market information it is hard to separate yourself from the action and avoid personal responses to the market. The market doesn t care about your feelings. Traders have heard it in many different ways the only thing you can control is when you buy and when you sell. In response to that it is easier to know how not to trade then how to trade. Along those lines here are some tips on avoiding common pitfalls when trading forex. 1 Don t read the news analyze the news. Many times seemingly straightforward news releases from government agencies are really public relation vehicles to advance a particular point of view or policy. Such news in the forex markets more than any other is used as a tool to affect the investment psychology of the crowd. Such media manipulation is not inherently a negative. Governments and traders try to do that all the time. The new forex trader must realize that it is important to read the news to assess the message behind the drums. For example Japan s Prime Minister Masajuro Shiokowa was quoted in a news report on Dec. 13 that an excessive depreciation of the yen should be avoided. But we should make efforts and give consideration to guide the yen lower if it is relatively overvalued. When a government official is asking in effect if traders would please 24 February 2002 slow down the weakening of his currency then we must wonder whether there is fear the opposite will happen. In this case that was the outcome as on Dec. 14 the dollar vs. the yen surged to a three-year high. The Prime Minister s statement acted as a contrarian indicator. This is what fade the news .

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