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Pattern Recognition And Why You Need To Learn It To Be Successful In Forex Trading

Aug 17, 2007
Unlike the NYSE and other exchanges, the Forex market isn't localized in one place. Foreign currency trading is done via telecommunications all over the world and the market is open 24 hours a day Sunday though Friday. The market opens Sunday afternoon and runs through Friday afternoon nonstop. No matter where in the world you are you can find a dealer to quote currency exchange rates in just about any time zone.

After choosing what currency an investor wishes to buy, it is handled through one of these dealers and you can even do this online. Just like in the regular markets, it is possible to speculate, and many investors in Forex do this by getting a credit line. This marginal trading technique can help to greatly increase the potential of profits as well as losses, so be careful with it.

Pattern recognition is a method that will help you to be a much more successful trader. Just as with regular stock trading, the foreign currency exchange markets will very often repeat certain patterns over time. Learning to recognize these patterns and gathering the information found around them can give a Forex trader the knowledge and expertise needed to take advantage of them.

Pattern recognition is similar to learning how to diagnose diseases as a med school student or intern. For example, all diseases are defined by their own specific set of symptoms. The student runs tests and observes the patient to gather information needed to determine what the disease is. This is why med school students are required to see large numbers of patients to increase their knowledge as they practice putting all of the information together so that they can accurately diagnose conditions.

Not unlike the huge books carried around by med school students, many of the books on technical analysis for pattern recognition are quite large and cumbersome. Those who hope to become experts in the field use these books and their historical depictions of past trading patterns to help them try to identify current patterns and take advantage of them for profit.

The study of pattern recognition and research answers can often result in different training methods for traders. Most traders gradually improve their trading results though research, data collection, and learning to use better and more comprehensive tools. Those who take the approach of pattern recognition get knowledge straight from experts in the field and by practicing the methods learned, they become very competent in Forex trading. One will continue to become better by constantly trading and taking the advice of qualified mentors.

The other thing that one must be aware of with pattern recognition is that it is very individualized and a successful trader you think is using only pattern recognition is probably employing other research methods as well as their own personal experience in order to make their choices.
About the Author
Gregg Hall is an author living in Navarre Beach, Florida. Find more about this as well as FX trading strategies at http://www.FXTradingStrategies.com
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