Video: Analysis to Highlight Versus Justify for a EUR/USD Review
• Using analysis to spot trades and establish positions is the foundation of good trading
• However, like any other utensil, analysis can be misused to allow for discretion and emotion to override a plan
What are the Traits of Successful Traders? See what our studies have found to be the most common pitfalls of retail FX traders. )
Analysis is a useful 'trading tool', but using it incorrectly can do us as much disservice as a proper application can help us. There are many traders - I count myself among them - who have been in a position that moves against them, and then use analysis to 'justify' breaking from the well-thought out plan used to initially enter the trade. What seems like an effort to reevaluate a trade turns into an effort to justify reverting to a more emotionally-based trading approach. This easily down in technicals whereby a once-critical level breaks and the trader looks for the next level to emphasize rather than exiting as originally intended. That said, this is just as common a foible for fundamental analysis. We discuss the misapplication of analysis in today's Strategy Video with a recent review of EURUSD and EURGBP to provide hypothetical examples.
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