Today we have advanced forecasting methods at our disposal as the power of computers has increased, they can do more in less time than ever before and the computer that sits on your desk top, is far more powerful than the one that helped land man on the moon. So let’s look at advanced forecasting methods in more detail…
Before we start lets quote a simple fact which may make you think.
Despite all the advances we have seen in technology over the last 20 years the ratio of winners to losers still remains the same – well over 90% lose and 10% win and make the big profits. So all these advances in technology and forecasting have done nothing in terms of increasing the ratio of winners and the reason is obvious!
Scientific methods CANNOT help when you are trading an odds based area like forex.
There is no scientific movement of prices and that’s obvious, because humans are emotional beings.
You will hear many people who say there is but if there was, we would all know the price beforehand and there would be no market.
I see lots of clever systems based on neural networks, chaos theory and artificial intelligence but most are junk and fail. Not because they are not clever but because scientific theories don’t work on a market that doesn’t move to a scientific formula!
If You Want to Win Understand This!
Simple systems work best as they are more robust than complicated ones, with fewer elements to break and are ideal forex trading an odds based market such as forex.
This has been the case since trading began and all the computer geeks and mathematicians who try and beat the market learn a lesson as the market beats up and destroys their equity.
The markets don’t reward you for being clever or having a complicated trading system, you get rewarded for being right with your trading signal – nothing more.
I always find it highly amusing when I see the sales copy for many systems and how they proudly say the developer is a mathematician, or wiz kid at physics – big deal. It proves nothing and these people tend to be the worst traders as they think being clever gives them a right to win and it doesn’t.
In forex trading all you need is a simple system, the confidence and discipline to follow it and you will probably beat any of the systems with fancy names, which are applied in the brutal world of forex trading and fail.
So forget advanced forecasting, stick with simple forecasting and you will find you will probably make a lot more money.