I have now been hearing some individuals saying that Forex trading is risky because a person can lose a lot of money in trading Forex. On a single hand, this can be good news because it's somehow deterred some individuals from trading Forex specially when they're not prepared to get proper education to learn how to trade well. On another hand, some individuals are determined to give Forex trading a try, as they have been told it is just a quick to be rich scheme. Unfortunately, they lost their momentum because they may not find any profitable trading strategies and thus, they figured Forex trading did not work. stock options trading
With due respect, I submit that trading Forex can be quite a successful venture but we should treat it as a critical business and not really a quick to be rich scheme. What this signifies is that we must understand the various segments of a Forex trading business. They are trading strategies, money management and trading psychology. In this short article, I will focus on the very first segment - trading strategy.
I believe it is fair to express that all Forex traders will first learn trading strategies in this business before they consider another two segments. However, as some individuals take the view that Forex trading is just a quick to be rich scheme, they don't have the patience to accomplish the necessary work. Instead, their primary goal is to find the absolute most profitable strategy so that they may make money in 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 thousands of Forex strategies obtainable in the market. Every one of you'll come up with your own opinion. If I may, i'd like 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 understand what I'm going to express below will disappoint a few of you - there's no such thing called the absolute most profitable trading strategy. As traders, our job is to start to see the chart of a currency pair and decide when it is 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 have to learn a minumum of one trend strategy and one trading range strategy.
Some of my trading buddies would rather trade the Forex market based on news. What they do is to find the headlines to trade and consider how a particular currency pair will react following the announcement. Typically, news trading strategies will be a quick scalp on a currency pair and are derived from an information on a lesser time frame.
Finally, exactly why breakout strategies exist is because there are traders who would rather have a position on a currency pair after it breaks out of a trading range. stock option trading
As you will see, different traders could have different trading preference. The first thing I believe you must do is to learn your own preference. Are you someone who is ultra conservative and you don't want to risk much in a trade? Or have you been someone who is aggressive and it is okay for you yourself to cope with higher risk investments?
Although I mentioned news trading strategies here, I do not trade any one of them personally because they don't fit my trading personality. I'm more or less focusing on both trend strategies and trading range strategies.
Here is another important point for you yourself to consider if you are learning any strategy from another person. I'm certain that the person from whom you learn could have their own trading rules. You have to ensure that these rules fit your own trading personality. If not, it is likely that strategy will not work for you even though it works for that person. If you determine to tweak these trading rules to accommodate your preference, you must be prepared to spend some time on back-testing and forward-testing the modified strategy to ensure that it generates very good results consistently.