Learning to trade Forex is not an easy task, but by no means is it difficult either. Learning to trade Forex does not require a great intellect or a college degree. Doctors have failed as traders and construction workers have become millionaires. Trading is all about discipline, determination and perseverance.
The key is to understand who you are as a trader and trade to your strength. Leveraging your strength can be magnified by deploying the appropriate Forex trading strategy.
There are hundreds, if not thousands of Forex trading strategies out there. Logic will tell us that there is a currency strategy out there which leverages our strengths. It is not a one-size-fits-all world. To immediately cut to the chase and take away the magic, it all comes down to two basic Forex strategies; trend-following and range-bound. All Forex trading strategies use a variety of indicators and combinations, MACD, Moving Averages, Stochastic, Chart Patterns, Candlesticks, Pivot Points, Fibonacci ratios, Elliott Wave analysis, Bollinger Bands and the list goes on and on. Let’s take away the magic again. These indicators and studies are merely measuring support and resistance and trend in the Forex market.
But which strategy really works? This is the age old question?
First, we must understand who we are as traders. Does our personality fit the pip sniper mode or does our disposition attract us more towards swing trading. Finding your trading personality will mean studying and experiencing the different time frames and associated Forex trading strategies. Over time you will notice a higher level of success and/or comfort trading one style over others. Pay attention! The market is telling you where your skill is more capable of extract consistent profits for the market. This is why journaling is so important to your Forex trading routine.
Secondly, if you are using someone else’s strategy, a most of us are, deploy this strategy without change until you fully and completely understand all aspect of the strategy through back-testing and actual experience. As I was told; dance the dance you have been taught until you learn a dance of your own!
Don’t fall into the trap of jumping from strategy to strategy or combining different strategies when the one you are using doesn’t yield immediate success. This is only a recipe for disaster. Take the time to really understand the trading strategy. Study the components individually so a deeper understanding of the strategic mechanisms is mastered.
Above all, know when and when not to deploy this strategy. You will not find consistent success implementing a trend following system in a range-bound currency market.
So what’s the right strategy for you? It is simple, the one that works. It doesn’t matter if it is complicated or simple, trend-following or range-bound, uses Fibonacci studies, pivot points or both. If you understand the components, internalize its use, and drive consistent profits into your trading account, then you have your Forex trading strategy.
It doesn’t matter what the experts say, your account balance is the ultimate judge and jury for your Forex trading strategy.
By: Todd Judkins
Posts Tagged ‘Swing Trading’
Learn Forex Trading – Which Forex Strategy Is Right For Me?
December 16th, 2009Forex Trading Strategy – The Easiest Trading Method for Novice Traders
February 13th, 2009
If you are a novice trader perhaps the easiest forex trading strategy to use is a swing trading strategy as it overcomes two problems that most novice traders face but cant overcome.
By using a swing trading strategy not only can you overcome these problems, you can give yourself a great chance of currency trading success.
Let’s look at this forex trading strategy in more detail
1. Patience
Most novice traders lack patience and they think the more they trade the better.
Most go for forex day trading which is probably the best way to lose money you can get – day trading simply does and cannot work, due to the fact all short term volatility is random.
You can never get the odds in your favour and you can never win – PERIOD.
Other traders however lack patience when long term forex trend following – they simply cannot accept the profits it wants to give them!
We all want profits – but when you sit on a long term trade and see open equity dips of thousands of dollars the temptation to take it is huge and most novice traders bank profits far to soon.
If you are forex trend following you need to take a bit more risk and that means hanging on for longer term gains.
Most traders simply don’t have the patience and discipline to do this and it’s hard even for pro traders.
Swing trading when incorporated in a forex trading strategy overcomes the problem.
You are looking at making profits in periods of 3 days to a few weeks, so you are never holding a position for long periods, and there are plenty of opportunities to keep the trader interested and finally, stop loss protection can be tight keeping risk low.
Forex swing trading is easier than long term trend following as you don’t have to be so patient, it’s easy to maintain discipline, which is the key to big forex gains.
2. Swing Trading is simple
Swing trading tends to be quite simple to learn.
All you need to do is look at support and resistance and use some momentum indicators to time your trades.
One or two timing indicators are all you need to judge price momentum as it moves into test support and resistance and your all set to swing trade.
Being simple to understand is a big advantage, because from understanding comes confidence and from confidence, flows discipline – the key to successful trading is having the disipline to foloow your plan through periods of losses and is a trait all succesful traders have.
So if you want to trade currencies then try swing trading its simple, easy on the mind and can be very profitable.
Consider it as part of your forex trading strategy and let it help lead you to the currency trading success you desire.
By: Kelly Price
Forex Trading Strategy – The Basics of a Successful Strategy For Success
January 1st, 2009
If you want to win at Forex trading, you are going to need a logically based Forex trading strategy and while this may sound obvious, most traders don’t get the basics right. If you want to win, this article will give you the basics of a Forex trading strategy for success.
Let’s look at the basics all successful Forex trading strategies have in common.
The Best Strategies are Simple
Never complicate your strategy! All the best strategies are simple and yours should be too, a simple strategy will be more robust with fewer parameters to break. You really only need two or three indicators at most and support and resistance lines to make money. Don’t make your strategy more complicated than it needs to be, there is no correlation between complexity and Forex success.
Trade Confirmation of the Reality of Price Change
If you are going to try and predict exact highs and lows, your going to lose. Prediction is nothing more than hoping or guessing instead, be prepared to miss the exact turn and get confirmation that price action has confirmed your trading signal. You won’t catch the exact high or low but you will make a lot of money, as you will be trading with the odds on your side and that means big long term profits.
Trade a Time Period in Which You can get the Odds on Your Side
If you think you are going to make money scalping or day trading, think again because you will lose. The day of the short term trader being able to make money has gone, with the arrival of instant price communication via the internet. If you trade short term moves your trading in random volatility and that means you will lose long term. If you want to win base your system on swing trading overbought oversold levels over a few times or on long term trend following.
Understand Volatility in Relation to Stops and Profits
The hardest part of Forex trading is knowing where to place your stops, so you don’t get taken out to soon and knowing how to trail them, so you can run trends for bigger profits. If you want to win, you must have a strategy to deal with it and any trader, needs to make a study of standard deviation of price part of their essential Forex education.
Money Management and Discipline
There are many ways to make money but all successful traders know, they need to have sound money management to ride out periods of losses until you hit a home run. You must be prepared to take your losses and keep them small and keep your emotions out of your trading. This requires confidence in what your doing and the discipline to follow your strategy. Always remember – if you don’t have the discipline to follow your plan – you don’t have one in the first place!
Winning at Forex You can do it!
Anyone can make money in Forex, just make sure you include the above basics in your Forex trading strategy and you are all set, to make a great income in 30 minutes a day or less.
By: Samuel Leslie Berkovits