The same Forex trading chart can appear differently to different traders. Some might find a buying trend; some might feel a selling trend approaching on the other hand. Market perceptions vary and that’s what makes Forex a dynamic trading domain. Forex charts house a lot of information within them and not every trader takes in the same piece of data. While it can’t always be said that only one perspective is truly right, sometimes there’s only one way to profit from a trade. And the trader that gets the vision right wins, while the one with the different view loses.
Here are 4 reasons why the same chart is seen differently by different traders:
1) High-risk Prospects: When a trader takes big risks in a trade, he/she tends to ignore the red flags. So between trader A who has risked $10,000 on a shaky trend and trader B who has taken negligible risks, the perspective is bound to differ hugely. Trader A will want to avoid any negative opinions because the trade has been made and a change of mind will only prove more detrimental! So when there are big risks on the line, traders will have varying ideas even though the Forex trading charts are same on both ends.
2) In and Out Perspective: A more obvious point to make is that a trader who is in the trade will have a different opinion of it when compared to a trader who is merely seeing. When you’re a part of an exchange, the perspective becomes more hopeful and you look for lucrative opportunities. Whereas, from the outside, it is more realistic and rational; bad trends will seem bad and profitable ones will seem good. A trader who isn’t in a trade will think how the risks will play out and if they are worth taking; so bad positions will be a stop sign and only a lucrative trade will be worth his/her time!
3) Trade Experience Bias: The experience a trader gets from a trade serves as a reminder. Let’s say trader A trades EUR/USD on a particular timeframe, with a specific Forex trading strategy and loses the exchange – the experience made hence is bound to be negative. So the next time a similar trend shows up, his/her perspective will be negative! But a trader who has yet to see losses or profits on a particular trend will face it without any bias.
4) Choice of Indicator Employed: Indicators are used to help identify trades and make the most out of each opportunity that presents itself. Depending on the indicators used, the perspective birthed might differ too. Some traders don’t use indicators at all, they trade with clean charts and surf the trends as they come. Such Forex players are bound to have a different idea.
As you start off, use a Forex demo account and learn how to study charts. Once you have mastered this, Forex trading will be a cake walk! The analysis is at the core of foreign exchange, and studying charts is an indispensable skill.
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