If you had aspired to become highly successful in making money by buying and selling in the foreign exchange market, you must have already put in place a sound risk management strategy. This simply means you will be disciplined enough to know when and where to apply your stop loss. Your personal character will determine the way you trade. A sound trading strategy will enable you to make the right choices at the right time that will allow you to buy, sell, long or short foreign currencies in almost any currency exchange market in the world.
Before you embark on your journey into foreign exchange trading, you need to understand that the foreign exchange market is a worldwide-decentralized financial market for trading currencies. This is a continuous operation business: 24 hours a day except weekends. According to the Bank of International Settlements, as of April 2010, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily volume as of April 2007.
We came up with 4 strategies to help you fine tune your own trading strategies and made it more robust.
Sustainability
In the financial world whether it is in equity or foreign exchange trading, there is no sure win strategy. What you want is to ensure consistency winnings in your trades in order to sustain your stay in this business. Your long term primary objective to stay in the foreign exchange business is to make good money from your trades regularly.
Emulate the success of others
Join an online forum or a local club to build up your knowledge by discussing with more experience traders. Do not be afraid to ask questions to find out what are their winning strategies. This whole exercise is to emulate, adopt and develop your own winning strategy because characters varies among people and so does trading. This will save you the valuable time and costly mistakes.
Profit and Loss ratio
Your aim is to achieve a profit ratio greater than one. Otherwise you are losing both money and wasting your own time. If you have more losing trades than winning, the strategy that you are using is obviously not suitable. Either you revise your trading strategy or examine your personal character. Do not let your emotions influence your trading strategy. Both greed and fear can be your worst enemy.
Time zones
Since the currency market is traded globally, you can find traders from around the world at different time zones. An effective trading strategy is highly dependent on the timing. Timing is considered to be among the most significant aspect of an effective trader.
Although foreign exchange trading can be a terrific way to earn money in the shortest time, it can however make you lose your money fast too. Choosing the right strategy and developing an effective trading technique is the only way to build a profitable and sustainable business in foreign exchange.
