Forex Opportunity - Use Your Intuition

By Albert Schmidt

Intuition plays an important role in Forex trading. It can create confidence or doubt in your trading decisions. Intuitive action is in some way opposite to mechanical type of action. Trader doesn't need rational justification for making a decision. Most successful traders have developed their intuition to help them in their trading.

How you can develop intuition? Intuition or feel for the market is not something you naturally have. Even though it seems that some people develop it very fast as they start trading in Forex.

In my opinion intuition in trading is the same thing as keeping balance while riding a bicycle. How do you develop that balance? By practicing over and over to ride a bicycle regardless of how many times you fall on your face before you can confidently ride it. The same thing is with the trading currencies. Before your develop intuition and feel for the price movement you need to practice simple steps in trading.

I have outlined three most important steps to develop your balance in trading Forex. If you keep following them relentlessly sooner or later you will develop your intuition for price movement.

Pick a trading strategy and a currency pair.

First thing you need to do is to pick a trading strategy that almost 100% mechanical and a currency pair. You may ask how a mechanical system can help you to develop a feel fro the market. Trust me it will help. When you were learning to ride a bicycle all you did is keep repeating a few simple mechanical steps that developed your feel for the balance. So the first thing is to choose a system that has simple rules of entry and exit.

Back test your system on a historical data.

This is very crucial step. Do not skip it. You need to take at least 100 practice trades on historical data. By doing this you accomplish three things. First you will develop you trading skills. Second you will find out the expectation of your system. If it is not profitable then you have to change parameters of the system or change it completely to another one. And the third most important thing is that you will learn the behavior of the currency pair. That's the beginning of the development of your intuition.

Forward Test your system.

After you found that your system is profitable you need to test in real time. This step is similar to backtesting but this time your do it in real time on a demo account. Make at least 30 trades in real time. Now it is time to observe how price is behaving before you get the signal to enter the market. It is this observation and executing the trades will actually develop your intuition. Gradually you will be taking trades based not only mechanical rules of your system but also on your intuitive discretion.

Albert Schmidt is a part-time currency trader. After quite a long time of struggle he learned to make consistent profit trading in Forex. Review a trading strategy he successfully uses in his trades.