| Forex Strategy: The Unstrategies |
 There is no shortage of tips, books, articles and anecdotes advising up and coming traders how to approach the Forex market. Unfortunately, there is also no shortage of bad habits, misinformation and inaccurate analysis as well. Here are some “suggestions” to leave out of your Forex strategy.On the subject of money management, never, never and never add to a losing Forex position to lower cost basis. Countless tales exist of professional traders who have done this and lost their firms millions. This is cardinal rule number one. Additionally, do not trade money you cannot afford to lose. Trading with this kind of desperation already sets a trader back in terms of trader psychology. When it comes to trader psychology, the right frame of mind is a must. The wrong frame of mind includes drowsiness; desperation; arrogance; hyper from too much caffeine; feeling the “need” to make a profit; greed; fear of missing a trade; fear of admitting you are wrong about a losing trade, and trading inebriated (seriously). Trading in the wrong frame of mind only allows the trader to deviate from his or her game plan. As far as game plans go, not having one is a big unstrategy. Just “winging it” is a plan for disaster. Before a trade is placed, entry, take profit and stop less levels should be established. A Forex analysis system should fit the trader, not vice versa. Some are technicians, others are fundamentalists, and many more are somewhere in between. What is important is to stick to the system that works for you. A system of analysis should heed the words of Albert Einstein, who said; “Make everything as simple as possible, but not simpler.” Too many indicators leads to confusion, but too few and the analysis is too thin. Even the best, most comprehensive Forex strategy cannot give a buy or sell signal all the time. The Forex market is a 24 hour, five day a week phenomenon. That does not mean that the retail trader must be “plugged in” to the market every hour of the day. A compelling need to always be in the market is detrimental to profits. Spend time with family and friends, enjoy some exercise or take up a hobby during those slow and illiquid periods. Being flat is a position. These are a few costly pitfalls to avoid when embarking on the journey that is Forex. Practice, patience and repetition are the traits that build a winning Forex strategy. |
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