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Think All You Need Is the Right Forecast?

Many (if not most) novice currency traders believe that all you need to make money in forex is a correct forecast – and $200 to open an online trading account.

Six years ago, when I first got into forex, I thought so too. You can imagine my surprise when I soon discovered that a correct forecast is only – maybe – half the battle. Not even that much. Why? I'll give you an example.

At 8:24 EST Thusday November 16, the Elliott Wave Currency Specialty Service posted this forecast for the Japanese yen:

USDJPY Chart



Let's say, based on that Elliott wave forecast from 8:24 a.m., you went long on the USDJPY at 118.10 – with a stop at, say, 117.90.

Six minutes later, at 8:30 a.m., the latest CPI number came out and the USDJPY moved 22 pips lower, to 117.88, triggering your stop by 2 pips.

Which was unfortunate, because immediately after touching 117.88, the USDJPY reversed and shot up higher. The forecast proved correct. But you weren't there to enjoy it: The volatility surrounding the news release kicked you out. You missed out on a nice move – and lost some money doing it too. And so it goes.

When you first realize that a right forecast isn't everything, it is both startling and discouraging. At least it was for me. Before, I had the safety net of the "correct forecasts." Now, I had to learn how to actually trade them.

And that was quite a task. In fact, it still is – even after six years of trying, six years of watching the markets, six years of immersing myself in currencies daily.

Could it be that I'm just not cut out for trading? Maybe. However, I'd like to believe differently. If Richard Dennis' "turtles" could learn how to trade – dammit, so can I.

Click the Forex Forecast header link above to learn about a trading software that provides low risk high reward trade setups, with built in position sizing function to correctly take the right size of position and not over-leveraged your trading account. This software is called MTPredictor and works on all financial instruments of currenices, stocks, futures, etc. Its one of the finest trading programs we use.

Good day and good trading.

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