Intuition and Forex trading.
The strategy of trading on intuition, despite the complexity of the entire Forex trading system, also takes place.
In the opinion of any novice trader, this is the simplest and most preferable trading option.
It seemed that there was something complicated here, I looked at the chart of the currency pair, the rate is growing and does not seem to be going to fall, which means we open a buy deal.
But for some reason, in most cases such experiments end in failure. Let's try to figure out whether two concepts such as intuition and Forex are compatible and whether it is possible to build your trading strategy based on this approach.
First of all, you should analyze the reasons for failures with an intuitive approach to opening trades.
These are:
Incorrectly chosen place to enter the market - as you have probably already noticed, the exchange rate of a currency pair at any time period does not always move in the direction of the trend. In addition, there are also Forex rollbacks , otherwise short-term trend movements against their main trend direction.
Therefore, even after guessing the direction of the trend, you can open a deal at its very peak, after which the price will begin to roll back.
Which usually leads to losses, which result in the closure of the transaction. The second situation develops according to an even more deplorable scenario: the trader does not guess the direction of the trend and opens a trade against it.
The existing pullback first brings profit, which instills confidence in the correctness of the chosen direction. But gradually the correction is completed and if the transaction was not closed at this time, it becomes unprofitable.
But instead of closing the position, the trader begins to wait for the return of the initial situation. He firmly believes that the losses are temporary and the trend will soon return to its normal course. After all, good things are believed much more readily. As a result, losses increase to the level of a stop out and only a couple of cents remain on the account.
Exit - here everything is still much more complicated, usually the transaction is closed when only a few points of profit are received, the trader is afraid of losing what he has earned and every movement against the trend causes panic.
From the above diagram it is clear that the main reason for failures when using intuition in Forex is two factors - incorrect entry into the market and lack of profit.
That is, if you still want to create a trading strategy based on intuition, you should pay attention to these two points.
And do not enter spontaneously, but close an already open trade only when clear signals for a trend reversal are received. Alternatively, you can clearly define the lifetime of each position. But then it will no longer be trading on intuition, but a completely different Forex strategy .