Technical indicators are a short term trader’s best friend. There are other methods that can help you to make a profit, but the method that will help you the most consistently, day after day, as you grind out countless trades and watch your account grow is the technical indicator. Nowhere is this more true than within the Forex marketplace. It doesn’t matter if you are trading currencies the traditional way, or if you are trading them as a binary option of some variety, technical indicators and a firm understanding of how to use them best will allow you to start making more trades without sacrificing your accuracy and correct trade rate.
First, one good thing to do is to identify what are commonly called pressure points. These are the moments when a decision needs to be made in a couple seconds, or just ignored altogether. If you delay too much, you will lose the opportunity, and trading regardless will just lose you money. The market will not pause for you to stop and think about things, but if you act as if it does, then you will miss out on profit potential.
Second, have a plan in place so that these split second decisions are made more formulaically. Have a set of criteria that you will go through, and make sure that you know how to go through them quickly enough to make an informed decision in a timely manner. The methodology isn’t that important as long as it works for you. Some people rely on trailing indicators and couple them with strength indicators to help give them an idea of where things have been and where they are most likely to go. Using something like the MACD and the RSI in conjunction will accomplish this. Just make sure that you know how to use them, have them tailored for the timeframes that you will be trading (this is especially true if you are a short term binary options trader), and that you can translate them into profitable moves. Take volume into account when looking at your indicators, too, so you can make more informed decisions.
You should also have an exit strategy before you begin. With binaries, this is built in and you don’t need to worry unless you are trading longer trades, but in the Forex market, you need to have a target price in mind for exiting the trade, and have a stop-loss point either programmed into your broker, or kept in mind while you monitor things. You also need to be able to adjust these if necessary. Just be sure that you have a good reason if you are going to be changing anything.
Always remember that things can be refined. Your strategies can always be improved upon and your profit rate can go up as a result. Don’t sacrifice making money for over-experimentation, but also be open to trying new things if they look likely to help you make more money. Talking with other traders can help you to get a jump ahead in this area.
Finally, don’t let impatience force you into making bad decisions. That’s one thing that short term traders seem to deal with more often than others do. It’s easy to get impatient because a trade isn’t doing what you thought it would do. When you make a bad decision because of your emotions, you lose money, and this adds up over time. If you need to, try to automate your trading either with a robot or by programming in stop-loss and sell points. Not only does this take some of the nervousness out of your trading, it frees up your time to do other things, too.