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24 May 2016

I have already been hearing some people saying that Forex trading is risky because a person can lose a fortune in trading Forex. Using one hand, this can be good news because it's somehow deterred some people from trading Forex specially when they are not prepared to obtain proper education to learn to trade well. On the other hand, some people have decided to provide Forex trading a take to, as they have been told it is really a quick to be rich scheme. Unfortunately, they lost their momentum because they could not find any profitable trading strategies and thus, they concluded that Forex trading did not work. stock option trading

With due respect, I submit that trading Forex can be a successful venture but we ought to treat it as a serious business and not just a quick to be rich scheme. What this means is that people must understand different segments of a Forex trading business. They are trading strategies, money management and trading psychology. In this article, I'll give attention to the very first segment - trading strategy.

I believe that it is fair to express that all Forex traders will first learn trading strategies in this business before they consider the other two segments. However, as some people take the view that Forex trading is really a quick to be rich scheme, they do not have the patience to accomplish the necessary work. Instead, their primary goal is to look for the absolute most profitable strategy so that they'll make profit the shortest time possible. My question is whether there's anything called the absolute most profitable trading strategy. I understand by asking this question, I'm inviting a debate here because there are a large number of Forex strategies obtainable in the market. Each of you'll develop your own personal opinion. If I might, allow me to first group all Forex trading strategies into four major categories: (i) trend strategies; (ii) trading range strategies; (iii) breakout strategies; and (iv) news trading strategies.

I know very well what I'm going to express below will disappoint a number of you - there's no such thing called the absolute most profitable trading strategy. As traders, our job would be to start to see the chart of a currency pair and decide if it's in a trend. If that's the case, we have to use trend strategies because it generally does not make sense to use trading range strategies. Conversely, if the currency pair has formed a trading range, it generally does not make sense to use any trend strategies. Therefore, we have to use trading range strategies. In short, a trader will need to learn a minumum of one trend strategy and one trading range strategy.

A few of my trading buddies prefer to trade the Forex market predicated on news. What they do is to look for the news headlines to trade and consider how a particular currency pair will react following the announcement. Typically, news trading strategies is a quick scalp on a currency pair and derive from a graph on a lower time frame.

Finally, exactly why breakout strategies exist is because there are traders who prefer to take a position on a currency pair after it breaks out of a trading range. option stock trading

As you will see, different traders could have different trading preference. First thing I think you must do is to discover your own personal preference. Have you been someone who's ultra conservative and you don't like to risk much in a trade? Or have you been someone who's aggressive and it is fine for you to handle higher risk investments?

Even though I mentioned news trading strategies here, I do not trade some of them personally because they do not fit my trading personality. I'm more or less emphasizing both trend strategies and trading range strategies.

Here's another important point for you to consider if you are learning any strategy from another person. I'm sure that the individual from whom you learn could have their own trading rules. You have to make sure that these rules fit your own personal trading personality. If not, it is probable that strategy won't do the job though it works for that person. If you decide to tweak these trading rules to suit your preference, you must be prepared to spend some time on back-testing and forward-testing the modified strategy to make sure that it generates positive results consistently.


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