6 Common Errors In Reading Forex Charts That Will Ruin You : 9 Reasons Why They Don't Work & What You Can Do About It

                                                                   

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Charts are an important tool in the hands of traders and traders rely a lot on forex charts in making money in market. But a lot of traders lose money daily as well making mistakes in using these vital data. Some reasons are listed below on why these powerful tool never work sometimes or go in the wrong way.

#1) Using Invalid Data:

One must use enough updated current data to win in the market. Data continue to change depending on the volatility and various economic & political conditions of the world mainly of the most economically powerful countries of the globe. 

So, using old data or data that has got no effect to deal with the volatility in the short term frames and support & resistance are highly risky. 

#2) Wrong Predictions:

Beginners may commit a grave mistake by relying on baseless hopes and guessing. But taking decisions purely on hopes and emotions never work always. Taking a decision of trade must be supported by logic and calculation. For instance, instead of buying a dip to support, in the hope it holds, one needs to check prices actually turn up and confirm support has held before executing one's trading signal. 

If one doesn't possess knowledge of 'momentum indicators' then one first needs to learn about how to use them. Stochastic and Relative Strength Index are the two best in this respect.


#3)Buying Breakouts:

Most traders prefer buying low and selling high and when they find prices breakout above a new high they wait for a bit pullback before their trades. But it has been observed from experiences, when prices breakout upside the previous strong resistance they generally don't pull back. The trick is simple - 'Buy high & Sell higher'. If one wants to make use of these opportunities by buying at upside breakout, then one needs to gather a lot of practical experience from the market.


#4) Wrong use of Indicators:

A lot of traders who buy dips to moving averages - is a lagging indicator. Again buy and sell the outer Bollinger bands - is a volatility indicator. Neither should be used to enter trades on their own. 


#5) Too Many cooks Spoil the Broth :

Using too many data,indicators and charts just make one totally confused and the right time and opportunity to enter a trade is lost.


#6) Not Being Objective:

Opinions and decisions suffer if one clings to being too much subjective. One should always try to remain objective and avoid use of charts and indicators that is too much subjective and based on theories such as 'Elliot Wave/cycles or any other indicator that is full of subjective & theories.