Wait, don’t open your trade

Seriously, I want you to stop for moment and think about the currency pair you are about to trade.

If you are taking your trade off the short term charts, take a look at a higher timeframe and ask yourself:

Is it really worth the risk? Do I have a clear idea of what the market is likely to do in the next hours, days, minutes (depending on the timeframe you are trading)?

This is how it works:

What happens on long term timeframes is always more important than what happens on the short term timeframes. For instance, a sharp movement on the short term charts might be just a small retracement on the long term charts.

And let me tell you something, I always like to put the probabilities in my favor (and I suspect, since you are a trader, you are like me) and that’s the reason I always trade in the direction of the long term charts (which is what I call the market condition).

I always trade off the 15M, 30M or hourly chart, but I always trade in the direction of the 4H and daily charts.

So forget about trading the currency pair with the tightest spread, it’s like choosing your girlfriend/boyfriends because of the color of her/his hair. It makes no sense.

I’d rather trade a 5 pip pair where I know what the market is likely to do, than a pair with 1 pip spread and I have absolutely no idea what it is likely to do.

Makes sense?

Let me know what you think.

forex analysis, market condition

Raul Lopez

I've been trading the markets for more than 15 years. I believe the best way to trade is by adapting to the market conditions. You can learn it too, join our community .