trading strategies

trading strategies

I have been hearing many people saying that Forex trading is risky because a person can lose a fortune in trading Forex. On a single hand, this can be good news because it's somehow deterred some people from trading Forex particularly when they are not prepared to have proper education to learn how to trade well. On another hand, many people decided to give Forex trading a try, as they have been told it is a quick to be rich scheme. Unfortunately, they lost their momentum because they could not find any profitable trading strategies and thus, they figured Forex trading did not work. trading strategies

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

I believe it is fair to express that most Forex traders will first learn trading strategies in this business before they consider another two segments. However, as many people take the view that Forex trading is a quick to be rich scheme, they do not have the patience to complete the necessary work. Instead, their primary goal is to consider the most profitable strategy so that they can make profit the shortest time possible. My question is whether there is any such thing called the most profitable trading strategy. I know by asking this question, I'm inviting a debate here since there are tens and thousands of Forex strategies available in the market. Each of you will develop your own personal opinion. If I might, let me 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 some of you - there is no such thing called the most profitable trading strategy. As traders, our job is always to see the chart of a currency pair and decide if it is in a trend. In that case, we have to use trend strategies because it doesn't seem sensible to make use of trading range strategies. Conversely, if the currency pair has formed a trading range, it doesn't seem sensible to use any trend strategies. Therefore, we have to make use of trading range strategies. In short, a trader will have to learn at least one trend strategy and one trading range strategy.

Some of my trading buddies prefer to trade the Forex market centered on news. What they do is to consider the headlines to trade and consider how a particular currency pair will react after the announcement. Typically, news trading strategies will be a quick scalp on a currency pair and are derived from a chart on a lower time frame. stock options trading

Finally, the reason why breakout strategies exist is because there are traders who prefer to have a position on a currency pair after it breaks out of a trading range.

As you will see, different traders may have different trading preference. The very first thing I think you should do is to find out your own personal preference. Have you been someone who is ultra conservative and you don't like to risk much in a trade? Or are you someone who is aggressive and it is fine for you really to deal with higher risk investments?

Although I mentioned news trading strategies here, I don't trade some of them personally because they do not fit my trading personality. I'm pretty much focusing on both trend strategies and trading range strategies.

Here's another important point for you really to consider if you are learning any strategy from another person. I'm certain that anyone from whom you learn may have their own trading rules. You have to make sure that these rules fit your own personal trading personality. If not, it is probable this strategy will not work for you though it works for that person. If you decide to tweak these trading rules to suit your preference, you should anticipate to spend some time on back-testing and forward-testing the modified strategy to make sure that it generates good results consistently.

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