The main reason why a very high percentage of new Forex traders end up losing their entire trading accounts is because they are unable to stick to simple, proven trading strategies. With the huge number of ‘secret systems’ which are being aggressively marketed online, it is not surprising that new traders like to change systems very frequently, as soon as their current one seems to be having problems.
Any successful trader will tell you to do exactly the opposite though, they will confirm that choosing one good strategy and remaining persistent with it until you can make it your own is the only sure way to Forex success. We think that using Forex support and resistance levels to trade is the best method for beginners.
Support and resistance areas are the names given to specific parts of a chart which should be focused on because they have a high probability of affecting price movements in the future. A support area often acts as a floor, supporting price and preventing it from falling any lower in a down trend. Resistance is just the opposite, and like a ceiling it can stop prices from increasing in an uptrend.
These effects can be either short term or long term. These levels are very often effective because they are usually obvious to see, meaning that trades all over the world will all be thinking about similar price levels. This almost creates a self fulfilling prophecy, support and resistance often works because so many people are expecting it to.
As a new trader we suggest looking into support and resistance Forex trading as well as other very basic concepts such as the use of candlestick patterns. These two methods alone can give some great trading setups and it is not necessary to begin using complex indicators or strategies while you are still learning.