There is a saying that you can bell a cat in more than one way. The same goes true with forex trading as well. There are numerous ways one can trade and at the end of the day it is only one’s imagination that gets in the way.
Are you a new trader struggling to find a good trading strategy? Has your creative mind hit a temporary roadblock? Worry not! In this article you will learn of some basic trading techniques that you can customize to your own requirements.
But before we get into that, a bit of context.
Forex trading is a dynamic and a very demanding area of investment that falls under the purview of active investing. Unlike stocks, with forex you cannot expect to just buy a currency pair and revisit that trade a year later. Prices can move up and down and sideways in a blink of an eye and can remain that way for months, if not years.
This is one of the reasons why many attempt to make a profit with trading forex but fail miserably. Many people think that trading forex can make them rich overnight. This isn’t the case however.
As you very well might have realized by now, having a good strategy is one of the important pillars to the success of your journey as a forex trader.
So without any further ado, here are some simple forex trading techniques ideal for just about anyone.
Calculate the risk tolerance
Ok, so maybe you weren’t expecting this one, but risk tolerance is an important aspect of trading. A trader who takes big risks will no doubt be rewarded equally. At the same time, this very trader can lose all their money in just a single trade.
Think about it. Do you want to be such kind of a trader? If you answered no, then this is what risk tolerance is all about.
Knowing how much risk you want to take plays a big role that forms the basis of your trading technique.
The trading size forms an essential element to your trading that is important as it can determine how much amount you can win or lose every time you trade. Of course, many traders prefer to take no risk at all but expect big profits, which is the other side of the story.
Having realistic expectations from your trading style plays an important role for traders and is one of the first steps in calculating the risk tolerance levels before you can even think of starting to trade.
Aim for some pennies
Do not take this literally, but what I mean is that by following a strategy that aims for the pennies, you are basically controlling your emotions and trading in a disciplined way.
Most traders give in to the greed and expect to make big profits on every trade. Sadly, forex doesn’t work this way and traders need to have a better grip on their trading goals.
By taking profits for every 10 or 20 pips at a time you can expect to make consistent profits every time you trade. Remember, with forex trading consistently plays a bigger role in your success than making big profits every now and then.
Try something new
As a trader you might have heard about moving averages, Stochastics and a bunch of other indicators. You might have also come across terms like engulfing candlestick patterns, doji, inside and the outside bar and so on.
Why go the usual route when trading is all about getting an edge? Try to get an edge by trading uniquely such as Renko charts which will make you look at the market with a completely different perspective. You can take a look at this free forex chart to learn more about Renko. Moving from a price and time based chart to a price only chart has helped traders to truly identify the strengthens and has often made quite a few traders successful.
At the end of the day it all about working out the basics and then building one’s skill. Trading forex is nothing different and requires pretty much the same approach. With some good enough dedication and practice, traders can look at making consistent and healthy profits regularly.