Using forex charts and technical analysis is a great way to enjoy currency trading success - the problem is most traders fall victim to common myths and join the 95% of losing traders. Here we will look at the forex chart myths to avoid.

1. Do Not Try and Predict!

Probably the most common error of all is when a forex trader tries to predict where a price is going to go to next and it's doomed to failure - Why?

Because if you predict you are hoping and guessing and you will find your predictions are about as accurate as your horoscope.

You don't get anywhere in life by predicting and certainly not forex trading - you need to trade the reality of price change.

2. Trade Valid Data

If you want to trade successfully you need to trade the odds and you cant do that in forex day trading because the time period is to short for the data to be valid. It doesn't matter how good your forex trading system is, apply it to day trading and you will lose.

3. Complicating a Trading Plan

It's a well know fact that simple trading systems work better than complicated ones as they are more robust in the face of ever changing brutal market conditions. Add to many indicators in and your system will have more elements to break.

So remember keep your currency trading system simple and profitable.

4. Not Buying Breakouts

Most traders like to buy low and sell high and this is a by product of trying to predict. Traders simply don't like buying trends in motion when they have missed a bit of the move - well if you don't, you will never catch the really big trends and will lose.

It's a fact that most major moves start from new market highs NOT market lows - so you need to forget buy low sell high, as a way to make money and think- buy high sell higher.

5. The Markets Move To a Scientific Theory

Many traders believe that as human nature is constant there must be a repetitive scientific formula that markets move to and they fall for scientific theories such as those sold by discipline of Gann, Elliot and Fibonacci and they lose.

Why?

Because its pretty obvious that markets don't move to a scientific theory as if it did we would all know the price in advance and their would be no market!

This is really common sense but you would be surprised at how many traders base their forex trading strategies on scientific nonsense.

6. No Indicator works all the time

This is obvious however you would be surprised at how many traders simply think buying dips to a moving average is a great way to make money! Always use a combination of 2 or 3 complimentary indicators and it's always good to use support and resistance lines as well, when generating a trading signal.

7. Using Indicators Incorrectly

We just gave you an example of using an indicator in isolation and also buying a dip to a moving average is incorrect usage - Why?

Because it's a lagging indicator and cannot confirm trades - you need to combine it with a leading indicator.

Another example is traders who set stop losses at the outer bands of the Bollinger band - this is not a good idea, because it's a volatility band that changes all the time, may move your stop to far away and cause you a big loss.

The above are common errors and if you make any of them you will lose. Forex charts are a great way to make money, charting is simple to learn, time efficient and works so learn how to use your forex charts correctly, by avoiding the above errors and you can enjoy long term forex success.