I have now been hearing some people saying that Forex trading is risky just because a person can lose a bundle in trading Forex. Using one hand, this can be good news because it's somehow deterred some individuals from trading Forex particularly when they're not prepared to get proper education to learn how to trade well. On one other hand, some people decided to offer Forex trading a try, as they have been told it is a quick to be rich scheme. Unfortunately, they lost their momentum because they may not find any profitable trading strategies and thus, they concluded that Forex trading did not work. what are stock options
With due respect, I submit that trading Forex could be a successful venture but we should treat it as a significant business and not a quick to be rich scheme. What this implies is that we must understand different segments of a Forex trading business. These are trading strategies, money management and trading psychology. In this information, I will focus on the first segment - trading strategy.
I still find it fair to state that most Forex traders will first learn trading strategies in this business before they consider one other two segments. However, as some people take the view that Forex trading is a quick to be rich scheme, they don't have the patience to accomplish the necessary work. Instead, their primary goal is to look for the absolute most profitable strategy so that they can make money in the shortest time possible. My question is whether there's anything called the absolute most profitable trading strategy. I know by asking this question, I'm inviting a debate here since there are 1000s of Forex strategies obtainable in the market. Every one of you'll develop your own personal opinion. If I might, 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. option stock trading
I know very well what I'm going to state below will disappoint some of you - there's no such thing called the absolute most profitable trading strategy. As traders, our job is always to start 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 generally does not seem sensible to make use of trading range strategies. Conversely, if the currency pair has formed a trading range, it generally does not seem sensible to utilize any trend strategies. Therefore, we have to make use of trading range strategies. In short, a trader will have to learn a minumum of one trend strategy and one trading range strategy.
A few of my trading buddies choose 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 derived from a chart on a diminished time frame.
Finally, exactly why breakout strategies exist is because there are traders who choose 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 first thing I believe you have to do is to discover your own personal preference. Have you been 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 okay for you yourself to handle higher risk investments?
Although I mentioned news trading strategies here, I don't trade any 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 should be learning any strategy from another person. I'm sure that the individual from whom you learn may have his own trading rules. You have to ensure that these rules fit your own personal trading personality. Or even, it is likely this strategy will not do the job although it works for that person. If you determine to tweak these trading rules to match your preference, you have to be prepared to spend time on back-testing and forward-testing the modified strategy to ensure that it generates positive results consistently.