Notes

 Whenever you read anything about trading on the Forex market you will see a disclaimer stating that Forex trading is very risky and no advice here is intended as to how you should place any of your individual trades. The reason for this is simply that it is true you can lose everything you had in a very short time when you trade the Forex or any commodities futures market for that matter. Therefore, anyone who is talking about trading the Forex has to be very careful to make everyone knows he's not giving explicit market advice, unless however, he is. I am not. However, even though any type of trading can be risky, there are some things some traders do that are more risky than others. In this article, we talk about one of those things.
Much of the Forex software around these days automatically generates buy and sell signals. These signals come fast and furiously and many times, several of these signals are created inside of one hour. Needless to say, not all of these signals are going to be accurate. In fact, unless somebody has developed some new, revolutionary type of software that can read markets very well; these signals are unlikely to be more than 50% accurate. What's more disturbing, is the fact some trades can turn to violently against you and this makes it difficult to close a bad trade before losing more money than a good trade will give back to you.
Many years ago an old market adage implored "never buck a trend." This means if the market trend is up you should never make trades that sell this market short. Of course, this also means if a market is in a downward trend you should never buy until it has bottomed out. They used to say that buying into a market when it is falling is like sticking your hand out to catch falling steak knives. This is a gruesome thought but then again, trading the Forex can end up giving you gruesome results.

The point to all this is; when you are using software that is generating signals that both go with and against the market, you should be especially careful. When the overall market trend for a currency pair is upward and you have a trade on the short side, your trade is liable to turn on you very quickly. What's worse is, in such situations it may gap up. This means it may be trading at 1.33000 1 second and 1.34500 the next. If you have a sell stop at one 1.33200, you will not get out until it hits 1.34500. The reason for this is simply because the pair never actually trades at 1.33200 and a stop order only initiates a market order and does not guarantee you will get out at the number you specified.
Can this type of thing happen when you are trading with the trend? Yes, it certainly can! However, when you are trading with the trend such violent moves don't seem to go against you quite as often. The bottom line is, it is tough enough to be a successful Forex trader without being led around by computer programs that induce you into bucking the trend.
https://dailyforex.news/ of this article, Ed Lathrop, is a certified commodities futures broker having passed the Series 3 National Commodities Futures Exam in 1993. Visit his Free website, Forex Trading System which has been called the number 1 Forex resource on the net. Also, get free up-to-the-minute Forex quotes, charts and other resources at Daily Forex Signal.

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