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Trading Forex can involve using a wide range of analysis tools, it may be better for you to trade more currencies and less tools.
Forex tools and analysis
You may have come across dozens of Forex analysis tools in your trading career, some of them quite useful, some of them totally useless, some you may just using incorrectly. In the world of trading currencies there really is a plethora of tools that you can use individually or in conjunction with others. Some tools like trendlines, the Fibonacci tools and channels require user perception, so it’s down to you as a trader to understand where to place them and understand the implication of the indicated levels in the context of the charts and currencies that you’re analysing. Most indicators though are derived mathematical calculations for which you input variables, the simplest of these being the MA, or Moving Average, you enter which price you want to calculate on, be it high, low, open or close, and the amount of bars you want to calculate, popular values are 21, 50, 100, 200. There are also fixed indicators like Pivot Points, which are levels calculated over a period of time, based on the high, low, opening and closing time of that period, these are implied levels, which are often but not always respected by the currencies that you trade. Trading forex is a game of probabilities, you will never always get it right, but you want to put yourself in a position that most of your trades are profitable or at least your profits are greater than your losses.
Now, you may be thinking which indicators and tools should I use, well if you use all of them you will end up with a whole bunch of contradicting signals, which will at best only serve to confuse. My recommendation is to keep everything as simple as possible, the less subjective and the less settings to muck about with the better. Fibonacci is a highly used tool, it is an industry wide tool used by forex professionals, amateurs, institutional and retail traders alike, in which case this is one you should not avoid.
A lot of traders stick to two or three ‘familiar’ forex pairs, and then use a number of tools to analyse and try and work out effective entries and which direction that currency will be heading, they can spend a lot of time and effort using a lot of tools with a number of different setups in mind, this can easily lead to paralysis analysis, that can lead to rather poor trading. But, consider this, what if you simply decided on 1 or 2 tools and 1 or 2 setups and from all the currencies you have to trade, choose a good number of them, you could easily trade 30 currencies, not all at the same time of course, but with your simple easy to spot setups and minimal analysis and longer timeframes, you can easily spot the highest probability setups, spend less time analysing and make more money. A case of picking the low hanging fruit from all the currencies.