I have been hearing some people saying that Forex trading is risky because a person can lose a lot of money in trading Forex. On one hand, this may be good news because it has somehow deterred some people from trading Forex especially when they are not prepared to get proper education to learn how to trade well. On the other hand, some people have 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 concluded that Forex trading did not work.
With due respect, I submit that trading Forex can be a successful venture but we must treat it as a serious business and not a quick to be rich scheme. What this means is that we must understand the different segments of a Forex trading business. These are trading strategies, money management and trading psychology. In this article, I will focus on the first segment – trading strategy.
I believe it is fair to say 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 a quick to be rich scheme, they do not have the patience to do the necessary work. Instead, their primary goal is to look for the most profitable strategy so that they can make money in the shortest time possible. My question is whether there is such a thing called the most profitable trading strategy. I know by asking this question, I am inviting a debate here since there are thousands of Forex strategies available in the market. Each of you will come up with your own 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. 대여계좌
I know what I am going to say below will disappoint some of you – there is no such thing called the most profitable trading strategy. As traders, our job is 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 does not make sense to use trading range strategies. Conversely, if the currency pair has formed a trading range, it does not make sense to apply any trend strategies. Therefore, we have to use 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 based 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 will be a quick scalp on a currency pair and are based on a chart on a lower time frame.
Finally, the reason 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.
As you can see, different traders will have different trading preference. The first thing I believe you must do is to find out your own preference. Are you someone who is ultra conservative and you do not like to risk much in a trade? Or are you someone who is aggressive and it is fine for you to deal with higher risk investments?
Even though I mentioned news trading strategies here, I do not trade any of them personally because they do not fit my trading personality. I am more or less focusing on both trend strategies and trading range strategies.