Why Forex Traders Fail and How Knowing the Nuances of RSI Will Make You Money

Why do most traders fail in Forex? Statistics show that 90-95% of people who trade Forex fail. The answers are actually very simple. Most traders who try have been sold on the idea that it is easy. It would be like someone convincing you that you could do the same job as a professional athlete and you buying into it only to be creamed on the first play by a 350lb lineman.

Forex was not set up to let traders make money with robots and automated trading systems. The big boys make money in Forex because they know what they are doing. They spend hours researching the market, they have computer programs at their access and they know who is placing the big orders. The deck is stacked. Not even a very bright student at MIT, Harvard or Yale could come up with a program that could beat the market. If that weren't enough the "noise" of traders taking positions on both sides of the market almost insures that any trading system is going to flutter and flop.

Does that mean Forex is a poor place to invest? No, it just means that if you are going to rob a bank you don't go to the door with a.22 in the middle of the day when there are 25 cop cars sitting outside. To trade Forex you do have to be sneaky. You need to know when to get in and take your fair share and when to get out. The market is efficient most of the time meaning there is a 50/50 chance that when enter you will be right. Those aren't great odds. Sorry, that's the deal. Read 10 books on price theory and you will agree.

So, what do you have to do to make money, to change the odds? First, find a system that triggers you to times when prices are out of balance. There are times when this happens and with the right tools you can be ready to take advantage.

One method is learning how to read an oscillator like RSI, the Relative Strength Index. One of the key things you can learn if you look long enough is what a Range Shift is on RSI. Ask 100 traders what that is and 99% won't have a clue. A Range Shift on RSI is when price slips through the previous range of RSI to establish a lower range. When prices are trending up, RSI stays in a range of roughly 80 to 40. When prices are trending down RSI trades between 60 and 20. The range shift is when the change happens and very few people see it. But if you are watching you can catch it and be early to the party.

Learning to find the imbalances in Forex pricing is how to win on a consistent basis, it's not going along with the crowd thinking that the number one selling robot or automated system is going to make you millions. Look for a sound system, learn it well and then go out and make some good solid money!