The best 5 tips to trade forex in 2013

First of all, I want to thank all traders who have taken the time to send me an email and ask for my analysis! I really appreciate it and it’s because of you that I keep writing and posting my analysis!

I wish you the best in 2013, not only on your trading, but on every aspect of your life!

I just got back from my long vacations and I’m ready again to start trading and analyzing the market.

I admit these vacations were longer than I initially thought they would be, on hindsight though, they came in handy, and now I’m eager than ever to start trading again…

That being said, I’m off to start this 2013 with a post about what I think is going to be like to trade in 2013.

#1 Say goodbye to complex (and lagging) indicators

technical indicators

That’s right, get rid of all your technical indicators!!! (alright, not all of them, just keep one, or two at most).

I did it a while ago and you have no idea how it improved my trading.

Now, in 2012 we saw difficult market conditions to trade, (some say because of the difficult situation in Europe), and if you relied mostly on technical indicators to analyze and trade the market you know it was difficult right?

Takeaway: dont rely solely on technical indicators, try different tools (of a different nature e.g. price action).

#2 Analyze the market, then trade (no the other way around)

Can you relate to this scenario:

You feel comfortable about the EURUSD and take a trade… as soon as you open your trade you feel relieved. But  few seconds after you start thinking, what if other timeframes are against me?

Then you start looking at other timeframes, and you see the daily chart might work against you… mmmm and decide to close your trade.

Sounds familiar?

Takeaway: I always try to avoid this by doing a complete analysis every day before I start my trading. You can do the same thing.

#3 Simple is back, and stronger than ever

keep it simple

We’ve all heard about the KISS principle, but for some reason, we always like to over complicate things… specially when it comes to trading.

If you are like this, dont blame it on you, it’s human nature: we always want an explanation of everything (why the market moved like this, like that, we incorporate a new indicator for each move, and we end up with a system that is very complicated to trade).

But you know something, most of the time the simplest analysis has the greatest return.

What kind of analysis can simplify thing?

SUPPORT & RESISTANCE ANALYSIS

I dont know about you, but I think S&R analysis is here to stay, it’s stronger than ever and I think it’s the best tool we can use to get better results.

I’ll be writing more about S&R analysis… so stay tuned.

Takeaway: Give another chance to support and resistance analysis, make it part of your trading arsenal, you’ll get better results.

#4 Following the market is a must if you want to survive under the current market conditions

follow the leader

Yep… forget about guessing, forget about your crystal ball, forget about magic indicators and the like.

You know the market is the market, if it wants to go up (even when every fundamental is showing that it will go down) it will go up, if the market wants to go down (even when every expert in the market is saying it will go up) it will go down…

That’s a fact!

So instead of fighting the market, how about following it, how about instead of trying to guess the market direction, waiting for the market to make it’s first move, then we make our move… like the sound of that?

I do… I really do. Let met tell you, this is probably the aspect of your trading that will have the most impact in your results in 2013.

I agree, we all have biases, and we all make mistakes. But if you try to do this in a constant basis, you’ll get better over time, so why not starting today?

Takeaway: In a few words, follow the market instead of trying to guess the market. Wait for the market to make its first move, then make yours.

#5 Fundamental announcements have a new face

5 or 7 years ago it was a good idea to trade based on fundamental announcements (believe me, I did it and back then was a very profitable strategy – Remember the straddle technique?).

Then, the market started to react randomly to the fundamental announcements: the market spiked up, then down, and it ended up where it all started (before the announcement). So it was very difficult to trade the news…

But last year I saw a different behavior. Fundamental announcements didn’t have much impact on the market anymore, including the most important announcements (Non-farm payrolls report, interest rate announcements, GDP, etc…)

And as always, we NEED to adapt to the market conditions.

I used to close my trade before these announcements, but I think this year (at least at the beginning) I’m going to hold most of my trades during these announcements (unless market is too close to my entry level).

Takeaway: Monitor the impact of fundamental announcements and see the how you can adapt it to your strategy.

Your turn

What do you think of the market in 2012? Are you going to trade different in 2013 than how you traded in 2012?

What other things you saw different in 2012 than in other years?

Please share your thoughts.

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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 .

  • very impressive post!

  • CHANDRAN VELLUSAMY

    can we use pivot calculator to get S & R

    • Raul Lopez

      I wouldnt trust a S&R level taken off a formula… 

      The best support and resistance levels are manually drawn (from my point of view).. 

      Cheers 

  • CHANDRAN VELLUSAMY

    whats the simplest and best way to enter and out from market Mr Rail Lopez

    • Raul Lopez

      Hey Chendran, the simplest way to enter the market is using the methodology that fits your trading style :D

      No seriously… just try to avoid complicated indicators. 

      I rely on price action and Support & Resistance levels… Thats it! 

  • aolawale

    Hi Raul,
     
    pls do you have an indicator for S&R? since i don’t know much abt it.

    • Raul Lopez

      Hi there, 

      As in my previous reply, the nest S&R levels are calculated manually. Please refer to articles section, you’ll find plenty of articles about drawing support and resistance levels:
      http://www.protradingnow.com/category/articles/

      Let me know if it helps!

  • kams04

    Hi raul, how do i calculate the S & R.. where can i find them? so for eg. if the s1 is broken i should go short and if R1 is broken then I should go long.. is that what you are suggesting? can you please how this strategy works?

    • Raul Lopez

      Hello Kams, 

      It all depends on the market conditions. This is why it is so important to do your analysis before you do any trading, this way you’ll trade only in the direction of the market condition. 

      The best S&R levels are calculated manually. Please visit the articles section, you’ll find plenty of information about S&R levels:

      http://www.protradingnow.com/category/articles/

      Cheers,

      • kams04

        Hi Raul, Im having difficulty in doing analysis of the market.. can you please suggest me something?
        Thanks.

  • Ajay Kumar

    Oh your comment on price action in point 1 is really interesting, would really like more insight on this……..i’m sure it is that simple…..just price with MA and S&R? What do you suggest buddy? Thanks

    • Raul Lopez

      I’d suggest S&R plus price action… what do you think?

      • Ajay Kumar

        Well Raul I am a novice to trading, just started about 2 weeks ago. All I am doing is consolidating knowledge for now and want to be guided. I came across a strong promoter of price action, a chap in Australia, Nial Fuller, so when you mentioned it…..2+2 clicked and I totally agree with you about S&R…..its simple but sooooo effective, but what time frames? becuase it shifts too……!!

        • Raul Lopez

          S&R work on all timeframes… However, I use them in the long term charts for my analysis and used them on the short term charts to help me find a good entry. Cheers, 

          • Ajay Kumar

            Cheers Raul, please add me on email, like to stay in touch if you don’t mind. Any free charting software you suggest? At the moment I am paying for esignal!! Not sure if I should stick to them and their monthly charge. Take care buddy

          • Raul Lopez

            Hey Ajay, you can subscribe for free to my newsletter. You’ll receive an email everytime I update my blog. Try Metatrader: http://www.metaquotes.com Cheers,

          • Ajay Kumar

            Cheers buddy, alpari looks good :-) …….as soon as I amke some more money I shall do your course i am sure ;-)

  • Ajay Kumar

    Hi Raul, firstly happy New Year and happy trading….. I hope to learn from you and other pro’s! Love the 1-4 but as for 5, i’m not interested in trading the news, I am happy not to trade those days……can you send any more stuff on support and resistance please? thanks for your help ajay@divineyoga.co.uk

    • Raul Lopez

      Happy new year to you too… I’ll be writing about S&R levels… so please stay tuned. Cheers

  • cassyd

    Let me start by saying great article, with a lot of insight, knowledge and economic wisdom plus experience portrayal. I started trading with a very little margin Last year December. And truly speaking, market is a very difficult entity to predict. Even with all news provided and all different analysis provided, you don’t just easily guess that a particular currency will drop or rise in price. Or at-least that is how I feel maybe because I’m a newbie in this investment portal. The announcement of no change to interest rates by the ECB made me to pay attention to market news as much as I am paying attention to my daily technical analysis. That’s when I learn what a liquid market is because Euro gained strength against most rival currencies and in just few minutes more than 100 pips were reach on my trades, some gaining while some loosing. I am presently cooping people with experience at etoro platforms and it’s working for me. But I am looking for my own working strategy and I stumble daily upon different strategies which some are just too complicated to understand and to follow. Thank you for sharing your most brilliant article and I believe it will impact something great into everyone that is going to read it as it did to me. Well, this year look promising, looks like there will be many opportunities for a volatile market. cheers  

    • Raul Lopez

      Hey Cassyd,

      Thank you for your thorough comment. As you say, it’s kind of difficult to guess the market direction… that’s the reason I started to follow it instead of trying to guess… 

      Good look in your trading and let me know if you have any questions about my articles. 

      Cheers,