A career in forex trading looks pretty alluring to many. With one click of a button, one can make millions and trade from anywhere in the world at any time of day.
However, it is not that simple; there is no easy way to invest money. Some strategies can help you be successful, but it is up to you to fully understand them before putting your hard-earned money on the line.
Essential factors that people should consider when choosing a strategy:
Has it been proven?
Many traders have made a tonne of money by using this new strategy or indicator they found on Google or some weird PDF document. But is it true?
Many copy-cats claim to have the same or better results as someone’s proven strategy with some minor adjustment, but in reality, they are nowhere near the success rates of the original creator.
One typical example of this is Fibonacci Retracement Strategy by Rob Booker. There are hundreds of variations of this strategy all over Google, and most are not even close to being as effective as his version.
Is it worth the risk?
Trading carries risk no matter what approach you take. But some strategies claim that they can turn any market into a winning one.
Before you decide on getting involved with a strategy, find out what kind of risk is involved. Many different strategies include varying levels of risk; some are low-risk, and others carry high-risk. Low-risk strategies usually generate smaller returns, but it is safer to trade with them.
What type of market is best?
Sure, this question does not seem important at first glance since many strategies work in all kinds of markets. However, it depends on which type of market you prefer to trade-in. Some traders prefer trending markets where prices constantly move up or down, while others like sideways trendless markets.
It’s up to each individual to determine which kind of market they enjoy trading the most and then find a strategy that best fits their needs. It makes it easier for them to stick with a strategy and improve their chances of success.
How long does it take to learn?
Every trader has different standards when it comes to learning new strategies. Some traders learn about something new every week, while others have been trading for decades without looking at anything new.
The market changes very quickly, and if you want to be among the “top dogs,” you need to learn new material constantly.
Is it profitable?
The most crucial factor for most traders is whether or not the strategy makes money. If you cannot make any returns on your trades, there is no point in trading.
Some methods work better than others; some may require more analysis, while some may only ask you to “follow the levels.” Find out exactly what type of return can be expected from each strategy before getting involved with one.
Some strategies are great for scalability because everyone can use them simultaneously. Other methods might not work so well if too many people start using them at once, which leads to losses.
Thus, it would be best to determine whether your strategy is scalable or not before choosing it. If it cannot handle scalability, you will have to look for other methods that can work for your business model.
Remember that why spend time on something that cannot generate enough money to make a difference at the end of the day? Remember that there is no good or wrong method of doing things in a forex account in Singapore. Different strategies yield different results based on the trader’s input and abilities.