trading strategies


I have already been hearing some people saying that Forex trading is risky just 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 people from trading Forex particularly when they’re not prepared to obtain proper education to discover ways to trade well. On the other hand, some people decided to give Forex trading a decide to try, as they’ve been told it is just 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 can be a successful venture but we should treat it as a serious business and not just a quick to be rich scheme. What this signifies is that we must understand different segments of a Forex trading business. These are trading strategies, money management and trading psychology. In this article, I’ll concentrate on the very first segment – trading strategy. trading strategies

I believe that it is fair to state 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 just a quick to be rich scheme, they do not have the patience to do the required 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’s anything called the most profitable trading strategy. I know by asking this question, I’m inviting a debate here because there are tens and thousands of Forex strategies obtainable in the market. Every one of you will produce your own personal opinion. If I may, 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 state below will disappoint a number of you – there’s no such thing called the most profitable trading strategy. As traders, our job would be to begin to see the chart of a currency pair and decide when it is in a trend. If so, we have to utilize trend strategies because it doesn’t seem sensible to use trading range strategies. Conversely, if the currency pair has formed a trading range, it doesn’t seem sensible to utilize any trend strategies. Therefore, we have to use trading range strategies. Simply speaking, a trader will need to learn one or more trend strategy and one trading range strategy. stock options trading

Some of my trading buddies choose to trade the Forex market centered 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 will be a quick scalp on a currency pair and are based on a chart on a lowered time frame.

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

As you will see, different traders can have different trading preference. The very first thing I believe you should do is to find out your own personal preference. Are you currently someone who is ultra conservative and you don’t prefer to risk much in a trade? Or are you currently someone who is aggressive and it is fine for you to cope with higher risk investments?

Although I mentioned news trading strategies here, I do not trade any of them personally because they do not fit my trading personality. I’m just about 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 can have his own trading rules. You have to make sure that these rules fit your own personal trading personality. Or even, it is likely that this strategy won’t meet your needs even 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 excellent results consistently.


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