Successful Forex Trading Strategies – Three Critical Questions To Ask Before You Start
Successful forex trading strategies do exist. Forex trading really is a realistic goal for those who’d like to earn a living working at home: you decide whether one currency is going to rise or fall against another and make money if you’re right. Trouble is, successful forex trading needs a robust method to work out which way a currency is going, without which you might as well stick to picking lotto numbers – it’s much easier. So of course there are heaps of systems all over the internet which promise you millions for minutes of effort. Maybe even some of them work. But how do you find a strategy right for you?
Before purchasing any trading system – no matter if it’s forex, betting, spread trading, stock trading… – there are three fundamental questions you must ask:
- how much can I lose?
All over the internet you’ll find boasts about ‘how many thousands you can make’, ‘how many pips I captured this morning’ and so forth. Of course you can. I could put £10 on sterling to rise against the dollar this minute, and if it rises 100 pips in an hour I’ll be £1000 better off – very nice! But what if it goes the other way? How much will I lose? Indeed, how much am I willing to lose? That must be my first question before any other. If I have a million dollars to risk, my whole trading strategy will be different from someone who’s scraped together $50 they could just about afford to risk in the hope of a small but valuable gain.
- how simple is the system to learn and operate?
I’ve come across systems that ‘never lose’, ‘follow the trend to the end’ and ‘are simple even for beginners’ – systems that are so complex you wonder if the originator understands what he’s doing. What you need from a system is a set of clear, unequivocal and simple-to-read signals to show when to enter and exit a trade. Most important is that anyone must be able to read the signal in the same way; and the fewer indicators used the better. Keep It Simple, Stupid!
- how much money do I need to start with?
This is absolutely crucial. I’ve seen so many wonderful systems that show you what happens when you take $100,000 and… $100,000? I could retire on that! A good system will be able to take you from a starting bank of $50-$100 and by targeting small, regular gains build up your trading capital reliably and consistently till you can take from it the comfortable living you’ve always dreamed of.
