Thanks to the Internet, forex trading has become a social occupation. It’s not uncommon to find recommendations from all kinds of sources, ranging from the licensed broker to the self-proclaimed market pundit. And while at times it seems irritating to hear from them, some forex trading recommendations can actually be used to decrease risk and increase potential gains. The trick is finding which sources of information are worth heeding and which ones should be discarded.
Is it For or Against Your Trading System?
If your trading system works, meaning it is successful in extracting consistent returns with minimal capital risk exposure, then the need for recommendations that go against the system should be discarded. However, for novices that have neither a solid system in place nor the skills and experience to develop one, recommendations are incredibly useful.
For starters, it gives you an introduction to how other, more advanced traders think and analyze the forex market. You can learn terminologies and strategies just by reading these recommendations on a routinely basis. Although you won’t get a step-by-step analysis of why they took certain trades, these recommendations are laced with tactical hints you can use to your own advantage.
How to Spot Good Recommendations From Bad Ones
Some forex trading recommendations are simply given to benefit the person or group who offered the recommendation. They usually load up on these positions before giving the recommendation to their followers, whose positions will provide further momentum to the trade.
Good recommendations have the quality of being backed up by facts and not just sentiment. The person who gives out the recommendation uses either technical or fundamental analysis to confirm his/her projected move.
Bad recommendations, on the other hand, are obviously biased and serves a purpose of moving the currency pair even without any technical or fundamental data driving it from behind. Such moves, more often than not, fail and cause a serious loss to its participants.
Other Considerations to Forex Trading
Despite being dependent on recommendations, you can still use an automated system to open and close positions whenever the trader or market pundit you follow makes actionable recommendations.
It’s important that you use recommendations of a legitimate professional trader who has proven himself through tangible evidence including account statements and previous profitable trades posted online. Furthermore, try to develop a system for yourself, so that your trading business is not affected in case your source of recommendation/s suddenly quits giving invaluable advice or starts to charge high-priced fees for it.