There is no science in technical analysis, contrary to what forex traders think, it is just human nature. The trick to making big profits in forex is to understand the importance of the formula enclosed.

The following equation determines the price movements:

FUNDAMENTALS (supply and demand facts) + TRADER PERCEPTION OF = PRICE

 Human understanding is more important in making the price than the news and supply and demand factors. The facts remain the same but you, I and the mass of other traders all make our own interpretations, thus determining the price.

 Human beings are not logical creature, they are emotional. Human nature though is constant, and the emotions dominating the forex trading and those which can be seen on the charts are: Hope, greed and fear.

 The constancy of human nature can be further demonstrated by the fact that forex charts are not determined by any scientific theory, but by the emotional creation of high odds chart formations. The trading psychology is played over and over again over time.

 Forex charts are useful in spotting trends. These trends last for weeks, months or years and reflect the long term supply and demand for the currency. The underlying health of the economy is reflected by its currency and such economic trends last a long time.

 Pure human emotion produces price spikes, i.e., a tendency to push prices too far (up or down). But prices soon return to fair value, and these temporary spikes can be identified and traded for profit.

 Fact:

Most bullish markets collapse, while most bearish markets rally on – due to human nature.

 Forex trading spikes can be profitable, and these spikes occur not only in long term frames but also in short term frames within the main trend. These overbought/oversold scenarios can swing the trade for tradesmen.

Forex charts show the reality as it is, taking into account the fundamentals as well as the traders’ understanding of them, and are thus a great way to trade.

 A technical analyst is simply a profit-seeker, who doesn’t care how and why the prices move.

 With charting you are dealing with the odds and not the certainties, it is an art and the timing of your trading signal and formations are important. Anyone can learn to use them with practice. A few timing indicators and a simple system of support and resistance is required when using charts. The simple trading systems work in forex trading as they are robust and easier to break.

 So, do you want to start trading in forex markets in a great way? Then, get your charts out and start practicing your art. You can not only make big profits, but also attain currency trading success!