I have been hearing some people saying that Forex trading is risky must be person can lose a lot of money in trading Forex. On a single hand, this might be good news because it has somehow deterred some individuals from trading Forex specially when they are not prepared to get proper education to learn to trade well. On another hand, some people are determined to offer Forex trading a decide to try, as they have been told it is a quick to be rich scheme. Unfortunately, they lost their momentum because they might not find any profitable trading strategies and thus, they figured Forex trading did not work.
With due respect, I submit that trading Forex could be a successful venture but we must treat it as a critical business and not really a quick to be rich scheme. What this implies is that people must understand the different segments of a Forex trading business. These are trading strategies, money management and trading psychology. In this informative article, I will concentrate on the very first segment - trading strategy. stock options trading
I believe that it is fair to state that all Forex traders will first learn trading strategies in this business before they consider another two segments. However, as some people take the view that Forex trading is a quick to be rich scheme, they cannot have the patience to accomplish the required work. Instead, their primary goal is to look for the most profitable strategy so that they may make money in the shortest time possible. My question is whether there's such a thing called the most profitable trading strategy. I know by asking this question, I'm inviting a debate here since there are 1000s of Forex strategies for sale in the market. All of you will produce your own personal opinion. If I may, 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 understand what I'm going to state below will disappoint a few of you - there's no such thing called the most profitable trading strategy. As traders, our job is always to start to see the chart of a currency pair and decide if it is in a trend. If so, we have to apply trend strategies because it generally does not seem sensible to use trading range strategies. Conversely, if the currency pair has formed a trading range, it generally does not seem sensible to apply any trend strategies. Therefore, we have to use trading range strategies. Simply speaking, a trader will need to learn at least one trend strategy and one trading range strategy.
A number of my trading buddies would rather trade the Forex market centered on news. What they do is to look for the news to trade and consider how a particular currency pair will react after the announcement. Typically, news trading strategies is a quick scalp on a currency pair and are derived from a graph on less time frame.
Finally, the key reason why breakout strategies exist is since there are traders who would rather take a position on a currency pair after it breaks out of a trading range. stock option trading
As you can see, different traders may have different trading preference. The very first thing I think you have to do is to find out your own personal preference. Have you been someone who's ultra conservative and you do not prefer to risk much in a trade? Or have you been someone who's aggressive and it is fine for you to deal with higher risk investments?
Although I mentioned news trading strategies here, I don't trade any one of them personally because they cannot fit my trading personality. I'm more or less emphasizing both trend strategies and trading range strategies.
Listed here is another important point for you to consider if you should be learning any strategy from another person. I'm sure that the person from whom you learn may have their own trading rules. You've to make sure that these rules fit your own personal trading personality. If not, it is likely that this strategy will not meet your needs even though it works for that person. If you decide to tweak these trading rules to suit your preference, you have to be prepared to spend some time on back-testing and forward-testing the modified strategy to make sure that it generates positive results consistently.