They make simple, avoidable mistakes, because they don't understand how and why the markets really move and what tools they should use.



Here are 5 simple tips, to help you make money with technical analysis.

1. Follow The Trend.

Most novice traders try and apply technical analysis to day trading.

There are no predictable trades in a day and all volatility is random.

If volatility is random you can't use technical analysis!

This is of course is obvious to everyone except day traders - who lose.

Ever seen a day trader with a long term real time track record of profits?

Neither have I ? it simply does not work, so don't try it.

You should trade longer term, where the odds are on your side.

Technical analysis can then work to help you spot high odds trading situations.

2. Trade breakouts.

I am surprised by how many traders like to buy dips to support and never buy on strength when a breakout occurs, but the fact is:

Most major trends develop from new market highs NOT market lows.

If you don't learn to buy breakouts, you will miss them and some fantastic profit opportunities.

When buying a breakout you miss the first part of the move, but the odds of it continuing are high and that's why breakouts are so good to trade.

Furthermore, stop levels are obvious and tight, so losses are kept small.

3. Don't Predict Get Confirmation

Many traders pay attention to support and resistance but not to price momentum.

If you don't pay attention to price momentum you will lose.

If prices are moving toward support and you want to buy, don't just assume price momentum is going to change - WAIT For it to do so.

If you do, you're acting on confirmation rather than trying to guess if prices will hold ? look at the stochastic and RSI.

Both are great indicators to help you get price momentum on your side.

4. Combining Indicators

Only combine a few with your charts.

Many people think the more indicators they use the better, but this is not so.

It tends to make the system overloaded and break it.

Our favourites are Relative Strength Index RSI, stochastics and Bollinger bands and our charts ? that's it!

Others worth looking at are MACD, moving averages and ADX lines.

Just experiment with a few and see which ones you feel comfortable with and keep in mind less is more.

5. A Dynamite Combination For Profit

If you like to use support and resistance to enter trades, then use weekly and daily charts TOGETHER to generate trading signals.

Start with the weekly chart look for support and resistance levels that have been tested numerous times.

Then look for the same areas to have been tested on the daily charts.

If you have levels lining up on both charts, then you know that if they give way you could see a huge move.

Trade the breakout, when it comes and time your entry on the daily chart.

Above are 5 simple tips to use in your FOREX trend following method that could help you make some huge profits.