In Forex trading we talk a lot about letting emotions cloud your judgement. It’s all too easy, especially for new traders, to let feelings get in the way of a successful trading plan.

Often traders feel like the market is going against them on every trade. As if there is some force behind the market that reverses price action once you take a trade.

A great thing about the Forex market is that it has such great liquidity, meaning that price action cannot be control by a small number of traders, allowing much more trading to be carried out based purely on technical analysis, as opposed to shares where it’s largely based on news, or fundamental analysis.

But while it is important to suppress those emotions that lead to bad trading decisions, system chasing and consistent losses not consistent profits, it is also true that sometimes you need to trust your instinct.

Trust your instinct. Pic: Joe Nangle

Many new Forex traders don’t know where to start when they look at a price chart. Once this hurdle has been overcome through taking one of the many Forex trading courses out there, a certain ’sixth sense’ will develop about the markets. You’ll start to develop a ‘feeling’ about where price action is likely to go, or whether particular levels of support or resistance are likely to hold.

This is an important aspect of trading and is built up based on your experiences of watching price action. You will find that you will learn to spot, more quickly, previous levels of support and resistance and will make decisions about taking trades that you previously wouldn’t have been aware of.

It’s only with practice that this ‘higher level’ of understanding of price action on the currency pairings comes about and it’s useful if you’re able to get a better understanding by trading alongside others using the same or similar trading styles.