Choosing a forex trading strategy can be a confusing and pain staking endeavor if you don’t have some underlying knowledge of what type of forex trading strategy is best suited to your own personal situation. This article will discuss some of the various factors you want to consider before deciding on any one forex trading strategy.
• Personality
Your personality type will influence the particular forex trading strategy that you should use. If you have more of a type A personality than you are likely to mesh better with forex strategies that offer more definition and concrete trading signals as opposed to those strategies that allow more room for interpretation and artistic trading. If you have more of a type B personality than you are likely to mesh better with trading strategies that are “looser” and which allow more room for discretion and instinctual trading. Furthermore, your personality type may also have influence on whether not you are comfortable being a short-term trader or a longer-term trader.
• Time Frame
Some forex strategies are better for shorter time-frame traders, day traders, and scalpers, whereas some forex trading strategies work better for longer-term position or swing traders. Before deciding on any particular forex trading strategy you must first determine what time frame(s) you want to trade on. Generally speaking, beginning traders tend to do better on the longer time frames, such as the 4hr chart and higher. After you become successful on these higher time frames you can then begin to incorporate trading off of lower time frame charts, such as the 1hr chart and below. However, many traders spend their whole career only trading the higher time frames, and there is much evidence that supports the idea that trading the higher time frames is much easier and more profitable than trading the lower-time frames.
• Daily Schedule
What is your daily schedule like? Consider your time restraints before deciding on any one forex strategy. Do you work long hours and have family responsibilities on top? If so you are more likely to want to use forex trading strategies that take advantage of higher-time frame charts and only require you to look at the market once a day or perhaps once every other day. There are some very good forex trading strategies that work great with only analyzing the charts for a few minutes each day. Many traders make the mistake of re-arranging their lives around the markets when in fact this is neither necessary nor generally a good idea.
• Complicated vs. Simple
Finally, a factor to consider when deciding which forex trading strategy you should use is whether or not it is complicated. While the term “complicated” can indeed depend on the person interpreting it, many forex trading strategies and systems can be overly-complicated. It is best to use simple forex trading strategies that work because the strategy aspect of trading is not nearly as important as the psychology and discipline aspects of trading. Since this is true, why would you spend excessive time and money on a forex strategy that is overly-complicated and that will only confuse you and cause you greater difficulty in achieving your goal of consistently profitable trading? Simple forex trading strategies that provide a high-probability edge in the market are all you need, strategy-wise, for forex trading success.
