Forex Trading Strategies – Which One to use
There are hundreds upon hundreds of forex trading strategies out there published for free or sold for a fee. There are even automated forex trading systems or forex bots being bandied around as forex profit mills. There is simply too much hype about these trading strategies that that most of them are too good to be true.
The bottom line is that there is no such thing as a sure fire strategy for foreign currency trading that will guarantee 100% profits. Most of what you read about are just all hype and are often the results of ‘doctored’ back testing. If you are looking for the most profitable and sure fire forex trading strategies, unfortunately, there are none. Most – if not all – who have written and are selling their supposedly profitable strategies may have in all likelihood lost quite a sum trading the currencies. They may have resorted to writing and selling strategies to try to recoup their losses.
The trading volume of the foreign currency market is so huge that even the combined volume of all the equities market in the world pales in comparison. You need to understand the nature of this market for you to understand where the profit opportunities are. This market is highly volatile and totally unpredictable for those who have very little understanding of this market. They always often end up to be the milking cow of the established moneyed brokers and large investment funds who have a natural stake on currency movements because of their sizable capital stashed away somewhere. Even central banks working in concert with each other failed miserably several times in the past trying to influence the prices in their favor. They ended up losing big in all their failed attempts.
So, does this mean that the small fry in this industry – the individual speculators – don’t stand a chance against the moneyed lot with billions of dollars in assets? The answer is a definite no. They can make money trading in currencies as long as they ‘don’t buck the trend’. This means they should stop dreaming of forex trading strategies that will automatically reap profits for them and start doing the correct thing. And the correct thing is to trade in the same as the big moneyed lot. They set the trend. They have their own convictions and their huge trading volume sets the market direction. Finally, they will trade in this direction out of conviction even if the current fundamentals or the technical indicators portray a different scenario. To trade against them is futile and will only result in losses. The best strategy is therefore to go along and follow the flow of the ‘big money’.
But, “Not bucking the trend” and ‘following the big money’ may appear to be easier said than done. Without specific steps to follow, it may really be difficult to achieve. How will you know which direction the big moneyed lot is trading then?
What you basically need then is something that will tell you the underlying sentiment of those who are currently trading and pushing the price in both directions. And nothing can be better than forex trading strategies that incorporate the Japanese Candlestick charts because they can reflect with clarity what the traders behind a significant price movement feel.
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