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Forex Strategies and Trading Personality

MikeyMalarkey | Sep 10, 2009 |

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The first time I ever encountered the forex markets I was a young pup, green around the gills and eager to go out there and make a fortune with my trading adventures. Back then when I first started, I didn't have any kind of forex trading strategy, I was just keen to get stuck into the markets to try and make some money.

I must admit I cringe a little now when I look back and see how naÃ¯ve I was. But I guess I had to start somewhere and by making the mistakes I did, I learned a lot of stuff along the way.

So what were the mistakes I made and how can new traders avoid some of those mistakes?

Well, it's all about matching your forex strategy to your personality. Everyone is different and no two traders are the same. This is what makes markets - for every buyer there is a seller!

Let's say for example you are the type of person who is fairly strong willed, tenacious, stubborn even. You get a plan in your mind and you stick with it through thick and thin until it eventually pays off. Do you recognise yourself there? If so, you would probably make a good long-term trader, holding your positions over a period of days, weeks or even months until it achieves your target profit.

Not everyone can stay cool and calm when holding positions over the long term, especially when short-term price movements could be working against you, but if you have the personality for it, then this could be the most profitable type of forex trading.

Maybe you are a different personality type. Maybe you are someone who is a little impatient and likes to see short-term results. If something isn't working for you, you don't waste time on it. Instead you move on to something else that will work. If this is the case, then you are probably more suited to day-trading than long-term trading. Because you only hold your positions for a short period, quickly deciding which are profitable and which ones need to be cut as losing trades, you are matching your forex trading to your personality type rather than fighting it all the way.

Whichever type of person you are, and whichever forex trading strategy you use, always follow the golden rule: never risk more than you can afford to lose. And stay lucky!