When it comes to forex trading, there’s no shortage of advice out there. In fact, a Google search for “forex Strategies” will return you 21.5 million results.
But with so much chatter around industry tactics, it can be hard to filter the bad advice from the good. So, how do you drown out the noise and tune in to a forex strategy that feels right for you and helps you gain consistent profits?
Learn the ropes
If you’re not familiar with key forex investment terms, then now is the time to educate yourself. Once you’re familiar with the lingo, you can interrogate strategies quicker and dismiss the ones that aren’t useful to you.
Check out our guide to reading forex charts like a pro so you can monitor performance. And make the most of websites like Investopedia and Babypips; these are brilliant resources for newcomers who need to decipher key terms and concepts.
Pick your goals
The next step is to decide what you want to achieve. Only when you know this, will you know what kind of strategy to choose.
For example, if your goal is to make money quickly, then you might want to consider a high-risk approach. But a low-risk strategy may be a better fit if you’re looking to make a long-term investment.
Take time to identify exactly what you want to achieve from trading the forex markets before venturing into a trade yourself.
Finding the right strategy
There are hundreds - if not thousands - of methods for making trades in the forex market.
You should also consider whether it fits your personality. For instance, do you like following logical systems or do you prefer more creative, intuitive thinking?
A logical approach would involve setting a strategy and sticking to your guns. Meanwhile, a creative approach would be more agile, adapting to new ideas and your own intuition.
Once you’ve decided on a strategy, apply it consistently to analyse the results.
Beware false prophets
There are those in the forex trading world that claim to have worked out a system that can’t fail or that has an unusually high success rate. They may even have data that appears to back this up convincingly.
These will often be scams, and anyone trading the forex markets needs to be aware of them. As a general rule, if it appears to be too good to be true, it is.
If in doubt, the Financial Conduct Authority’s list of authorised and unauthorised firms is a handy place to check whether you can trust an individual or organisation.
One of the key ways to find out if you’re acting on good or bad advice is to analyse your trading performance regularly.
Don’t count small losses as negatives. Only consistent trading deficits over time should set alarm bells ringing, alerting you that your strategy isn’t working.
Trade with confidence
Once you’re up and running and making a profit, keep a steady flow of investments to create a positive feedback loop.
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