Forex trading strategies: Are some better than others?
Every successful forex trader knows that, for you to win, you must have a clear strategy. You also have to always stick with it, whether your trades are winning or losing. The goal is to get comfortable with a strategy that it becomes easy to handle drawdowns or let winning trades run to the point where your strategy says exit.
While you can always craft your own, a couple of popular forex trading strategies have been tested and proven to work over time. Anyone who masters any of them and applies them consistently has the potential to see their success rate improve. But with so many of these strategies readily available to traders, it is only natural to wonder, are some forex trading strategies better than others?
The answer to that is No! While one trader can struggle to succeed with a given forex strategy, another could excel at it. So, then, what separates winners from losers when applying forex strategies?
There is no single answer to that, and all the factors below have a huge role.
Managing emotions when trading
Every forex trader knows that at any one time, they have to struggle with the emotions of fear and greed. These emotions can easily cancel out the success rate of any strategy. To manage the feelings of fear and greed and increase the odds of winning regardless of the strategy, it is always best to only invest what you can afford to lose. This takes away the fear of loss whenever there is a drawdown, or the need to close a winning trade out of fear that things could turn.
Being in tune with the strategy
Choosing a trading strategy is not just about what’s popular. It’s about knowing what works for you, especially when it comes to screen time. For instance, someone who enjoys a lot of screen time may find success from a scalping or day trading strategy. The same strategies would be stressful and a potential source of failure for someone who has to spend their time doing things. For such a person, swing trading may be more in tune with their character.
The quality of your broker
The quality of the broker you use can either make or break you, depending on your strategy. For instance, a broker with high spreads can make success almost impossible for someone who chooses a scalping strategy. In essence, to win at whatever strategy you choose, select a broker whose interests align with yours. Among the factors to consider when choosing a broker include their spreads and the responsiveness to customer needs.
Take time to get confident in a strategy.
Choosing a trading strategy is one thing; always sticking to it is another. For a strategy to give results consistently, you need to trust it entirely to provide you with the desired results. One of the ways to do this is by using back-testing software. This entails running data through analytical tools to give you a clear idea of your chosen strategy’s win/lose ratio.
The other way is to learn and understand the strategy, then trade it until it gets to a point where it is second nature to you. Of course, using the right risk management tools also helps build trading confidence.
There are multiple trading strategies, and a couple of them have become highly popular among traders. However, despite their popularity, these strategies give different results to different traders. It all boils down to the individual. To increase the odds of good outcomes, it is best to fully familiarize yourself with a strategy and trade with a broker that doesn’t have a conflict of interest in your trades.
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