Forex and Trading Perspectives

It seems I have hardly gotten any writing done this last week, and indeed judging by the entry dates, I am absolutely right. My apologies for being so reclusive, but as many of you know, I was hit with a virus that brought me to my knees.

I rarely get sick, and that is a wonderful blessing. But sometimes we take our blesings for granted. Generally, I might get a little sniffle or slight cough, but this time I got the full treatment: a sore throat that was somethin akin to swallowing shards of glass, a cough that sounded like a herd of small hippos at play and a lack of appetite that cost me 6 pounds. It also cost me something else, we ended up with back to back negative trading weeks. I really hate that! Trading is hard work, and takes loads of concentration. But when a trader feels bad to begin with, then dopes him/her self all up on medicine, it can be a real recipe for disaster. A fuller statement of this idea would be; don't trade while you are drinking heavily, while emotionally upset, or while tired. All those things really affect your judgement. They certainly affected mine.

But that's not really the only perspective that I had in mind for today. As you all know, we are headed into the summer doldrums here in North America, a season of time when trading slows down, ranges often become tighter for days on end, and the waiting can be sometimes painful. But I am a big believer in low intensity trading. As it is, trading is intense enough, after all, your money is on the line. So anything that can be done to reduce the intensity is only going to make it much more enjoyable. And frankly, the more enjoyable your trading is, the more profitable it will be.

But in today's lesson, let's take in hand the persectives that come from the different time frames. As you all should know by now, I am a huge believer in longer term time frames. "The shorter your time frame, the faster you will be parted from your capital."

You must always have enough to trade another day. The longer your time frame, the more time you give yourself, to learn the important lessons of trading. If you blow up your account, you'll never get to the important lessons.

I have often thought of the forex as a herd of traveling elephants. There are several key analogies. Obviously, when they are running through your town you don't want to get in the way. However, if they are traveling the way you are going, you can hop on and get a very fast free ride. And...the best place to observe them, is from a safe distance.

But the problem for many traders is that when they see the dust and hear the noise of all the action in the market, instead of standing back to take a look at the stampede that is going on, they have this sort of innate idea that they will be better able to tell what's happening if they just get a little closer. So they keep shrinking their time frame, getting closer and closer to the noise and the action. But one should use a little common sense. You can only get so close to the stampeding herd before "WHACK!", and you are another casualty of the market.

I say, better to stand back and get the lay of the pack. You'll be able to better see where they are bunching together, where and why they are slowing down, you'll get a better idea of the direction that they are heading. And you won't put yourself at risk. Because after all, the market doesn't really care how close you get. It doesn't really car that you and your account are going to get demolished. It doesn't give anymore thought to you than those raging elephants do. And sadly, your outcome will be the same.

So stand back. The forex market is every bit as dangerous as a stampeding herd. Get your perspective before you get too close. There is a limit as to how close you can view something,before you can't make it out at all. Trying to examine an elephant on a molecular or atomic level will tell you nothing about the dangers you are facing. So it is that viewing the markets on a pip by pip, or 1 minute, or 5 minute chart and so on will provide some fascinating stuff to see, but it will not make you a richer trader. And it could lead to signifacant losses.

Keep everything in perspective!

Bill
www.thefxtradingmasters.com
bill@thefxtradingmasters.com