FX is like learning how to play poker for a living – there is a ton of info out there, much of it useless and much of it useful. It can be difficult to simply just get started and making a few bucks. So what are some simple FX trading strategies that you could start to use today?
What you really need to have a good grip of are the basics. Some traders ignore the basics and then embark on a lucky winning streak. Eventually, their lack of knowledge of these basics brings them back to earth once more.
If you already know about these basics then feel free to look elsewhere, maybe at book reviews, or for more information on advanced trading courses that will take you from intermediate level to expert. But otherwise, take in a few of these basics.
Fundamental versus Technical Analysis
In all forms of trading, be it FX (forex), commodities, stocks or anything else – there is always the constant struggle between fundamentals and technicals, between fundamentalists and technicians.
The best traders know that both of these apply.
Just in case you didn’t know, technicals are a study of supply and demand, of market interactions and price activity. On the other hand, fundamentals are all about economic data on a grand scale. So what is the answer then?
The best traders know to use both pieces of information. Sometimes they can contradict each other but in general the fundamentals will give the longer term trend and the technicals will give you good ideas on timing and when to place your trades.
Study them both religiously!
Trade On Opportunities
A lot of traders feel they need to trade something every day. If you know your strategy then don’t break the rules of it. Don’t trade if there is simply no opportunity that day to make money.
Too many traders trade when they get bored and they simply lose money.
Trade On Logic, Not Emotion
I knew a guy who used to trade based on guy instinct. He did very well for himself and his wife was happy too. Then he lost most of it over the course of a weekend. Of course, being human nature, he didn’t blame his own instincts.
Trading is all about trying to come up with a simple model or system, whose rules you stick to religiously. Trading purely on emotion is dangerous. Although your instincts might be based on good logic, you will fail to exercise good judgement when it comes down to the close calls and that will likely cost you money.