The Importance Of Simplicity In Trading

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Albert Einstein once said things should be made simple and not simpler. It is applicable to trading. It is often overlooked aspect of trading especially forex trading.

Trading need not be complex. In fact it should be so simple that any layman should be able to understand it easily. We as humans have a tendency to turn simple things into complex creatures.

Guest post by FXBuild.com

Trading Is an Art

Many novice traders don’t recognize the fact that trading is an art. It is their ignorance which leads them towards finding a holy grail. Market is not a machine which can make you money when you use a particular complex model. Do you believe a market with a daily volume of more than one trillion dollars can be programmed into some kind of system? Many marketing gimmicks will be smart enough to make you believe that. So next time you get an email of sharing the best indicator with you, just hit the delete button. If you are a beginner, you will do a lot better if you understand the fact that trading is an art where you need to make discretionary decisions. It is not a rocket science.

Trading is for Average Joe

In fact it is in your advantage to know the fact that anyone can trade if you head in the right direction. You don’t need an MBA from an Ivy League college. You also don’t need fancy indicators in your arsenal to make a living out of trading. You don’t need to be wizard of economics and finance. Of course a sound knowledge of finance is useful. But it is not a prerequisite. All you need is the ability to read the naked charts based on the price.

Learn Price Action

Reading price action charts is not as difficult as it may sound. You can find variety of sources on the Internet. It is all in the public domain. Price action is the most basic thing in the forex world. It is very simple and easy to learn. Market is created by humans and they effectively run it. Price action shows you how the price has behaved based on the participants involved in the market. Majority of the failed traders take a wrong turn when they start trading. A simple trading strategy of reading the naked charts will alone make you a successful trader.

Stop Looking for Holy Grail

There is no such thing as Holy Grail in the forex world. No system works fine all the time. Stop looking for the best system because there isn’t one. Indicators are lagging so you will not make money by using them. But if you use the indicators as a tool to complement your perception based on the price action, you will avoid lot of losing trades.

Many times the obvious things are overlooked by majority of the people. If you observe the successful traders, all of them have one thing in common. They all follow the simple trading strategy. A simple price action strategy along with patience and discipline will make a killing for you in trading.

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

6 Comments

  1. “Indicators are lagging so you will not make money by using them. But if you use the indicators as a tool to complement your perception based on the price action, you will avoid lot of losing trades.”

    Contradiction: Since if you know where to avoid loosing money, there you know where to win money.

    • FXBuild.com on

      Hi thankme,

      Trading is a probability game. A good trader takes only those trades which have high probability of winning. Does that mean high probability trades don’t lose? Of course not. But over time you will make money. Now indicators are lagging. You can not use them effectively over a long period of time. Yes, they might work some time.

      However, they are not completely useless. You can use them as a secondary tool to confirm your trading strategy like price action. What is Price action is out of context here. But the point is you should use indicators as a secondary tool and not primary tool. Using indicators as a secondary tool will confirm a high probability of trade. As a trader you should know that even these high probability trades have slim chance of losing. I should have properly phrased the above sentence.

  2. Pingback: The Importance Of Simplicity In Trading | Daily Forex Signal

  3. I do believe in simple trading systems! So many traders show their great skills by adding, even inventing so many complex indicators. Many beginners fall into their traps and try to get those techniques in order to prevent loss. No, there is no lossproof system… For me, moving average and fibonacci are more than enough to survive in this market.

    • FXBuild.com on

      Hi Tinna,

      It’s true, more complex system doesn’t guarantee less loss trades.

  4. Alexander Collins on

    I’m used to trading with my simple semi-automated Forex trading strategy for years. It has been popular online for 3 years and still great link in the launch day.