Forex Trading Explained Archives

Mastering Forex Trading Thinking: Strategies for Achieving Success

by Dave

image of a smart guy's head, relating to forex trading thinking mindset

Forex, like any other form of market speculation, requires a unique blend of analytical and creative trading thinking. Successful traders understand that simply crunching numbers and analyzing charts isn’t enough to make profitable trades. They must also be able to think creatively and adapt to changing market conditions.

However, forex trading is also a high-risk and high-reward activity that demands a rational and disciplined approach to the market. To succeed, traders must strike a balance between their analytical and creative Forex trading thinking, constantly analyzing data while also remaining flexible and open to new possibilities.

This is where the concept of left-brain and right-brain forex trading thinking comes into play.

The concept of left-brain and right-brain thinking was first introduced by Roger W. Sperry, who won a Nobel Prize for his research in the 1970s. He suggested that the two hemispheres of the brain are responsible for different types of thinking.

In his words, each hemisphere is:

“… both the left and the right hemisphere may be conscious simultaneously in different, even in mutually conflicting, mental experiences that run along in parallel.”

— Roger Wolcott Sperry, 1974

The left brain is associated with analytical thinking, logic, and rationality, while the right brain is associated with creative thinking, intuition, and emotion.

The idea of left-brain and right-brain dominance has been popular in the past, however, recent studies have shown that the brain is much more complex than this simplified view and that both hemispheres work together in most cognitive tasks, including trading.

By cultivating a balanced approach to Forex trading thinking, traders can leverage both sides of the brain to make informed and intuitive trading decisions.

Learn how to harness the power of both hemispheres of your brain to become a more successful Forex trader.

Left-Brain Forex Trading

One approach that has gained popularity in recent years is left-brain trading. Left-brain traders are analytical, logical, and data-driven.

They rely heavily on technical analysis to make trading decisions. Technical analysis involves studying price charts and identifying patterns that can be used to predict future price movements.

One of the biggest advantages of left-brain trading is its simplicity. Traders can use well-established trading strategies and techniques to make informed decisions, based on pure price-action, and using just charts.

There is a wealth of information available on technical analysis and trading indicators, making it relatively easy to learn and apply. This approach provides a clear and structured framework that helps traders to avoid emotional decisions, which can be a major pitfall for traders who rely on their intuition or gut feeling.

Left-brain traders also tend to be good at risk management. They set clear trading goals, establish stop-loss levels to limit their losses and use position sizing to manage their risk. This approach helps them to minimize their losses and maximize their profits.

However, one of the limitations of left-brain trading is that it can sometimes overlook market trends and changes that cannot be easily quantified. Simply because the Forex market is dynamic and always forward-looking.

There are many factors that can influence price movements, such as political events, economic data releases, and changes in sentiment. Left-brain traders may miss out on these opportunities if they rely solely on technical analysis and ignore other factors.

Despite these limitations, many successful traders have used left-brain trading to achieve success in the Forex market. One of the most well-known left-brain speculators is, no other than, Warren Buffett, who is famous for his value investing approach. Buffett uses fundamental analysis to identify undervalued companies and invests in them for the long term. He has been highly successful, with a net worth of over $100 billion.

Another famous left-brain trader is George Soros, who is known for his macroeconomic approach to trading. Soros uses a top-down approach to identify trends in the global economy and invests in currencies that he believes will benefit from these trends. He famously made a billion dollars by shorting the British pound in 1992.

In summary, left-brain trading is a market approach that emphasizes data, analysis, and logic. It is relatively easy to learn and apply, and it provides a clear and structured approach to trading.

However, it can sometimes overlook market trends and changes that cannot be easily quantified. Successful left-brain traders, such as Warren Buffett and George Soros, have achieved great success in the markets by using this approach.

Right-Brain Forex Trading

While left-brain thinking is often associated with success in trading, there is also a place for right-brain thinking in the Forex market.

Right-brain traders rely on trading intuition, creativity, and emotion to make speculative decisions. They have a more flexible and adaptable approach to trading, and they are excellent at identifying market trends and changes that cannot be easily quantified.

Rather than relying solely on technical analysis, right-brain traders use their trading instincts and creativity to find opportunities that may not be evident from a purely analytical perspective.

Right-brain traders can use their intuition and creativity to identify emerging trends, spot market inefficiencies, and take advantage of market volatility. This approach can be particularly useful in volatile markets, where market conditions can change rapidly, and traders need to be able to adapt quickly.

However, right-brain trading can also be risky as it can lead to impulsive and emotional decisions.

Right-brain traders may be more prone to taking on excessive risk, chasing after losses, or making decisions based on emotions rather than logic. They may also struggle with risk management, as their intuitive approach may not always align with risk management principles.

Despite these risks, many successful traders have used right-brain thinking to achieve success in the markets.

One of the most well-known right-brain traders is Jesse Livermore, who relied on his gut instincts and intuition to make trades. Livermore was a pioneer in the field of technical analysis, but he also used his intuition to make decisions.

He famously made millions of dollars in the stock market in the early 1900s, but he also suffered significant losses due to his impulsive and emotional decisions.

Another successful right-brain trader is Paul Tudor Jones, who combines technical analysis with intuition and creativity to develop his trading strategies. Jones is known for his ability to identify market trends before they become evident to others.

He uses his intuition to identify emerging trends and his creativity to develop trading strategies that take advantage of these trends. He is also known for his risk management skills, which allow him to manage risk effectively while still taking advantage of market opportunities.

To summarize, right-brain Forex trading is an approach that emphasizes intuition, creativity, and emotion. It can uncover opportunities that may not be evident from a purely analytical perspective, but it can also be risky due to the potential for impulsive and emotional decisions.

Successful right-brain traders have achieved great success in the markets by combining their intuitive approach with risk management principles and a strong understanding of market dynamics.

Traders might have various questions when addressing the topic of forex trading thinking to determine if they are left-brain or right-brain traders.

Some potential questions could include:

Are there any online tests to find out if I am a Left-brain or a Right-brain forex trader?

Unfortunately, there are no definitive online tests that can determine whether you are a left-brain or a right-brain forex trader. However, you can take some general tests to assess your cognitive preferences and learning styles.

Here are a few examples:

Myers-Briggs: Type Indicator (MBTI): This is a personality test that assesses your psychological preferences in how you perceive the world and make decisions. Knowing your personality type can help you understand how you approach trading, what motivates you, and how you interact with others in the trading environment.

DiSC Assessment: This is a behavioral assessment tool that measures your dominant behavioral traits in four areas: dominance, influence, steadiness, and conscientiousness. Understanding your behavioral style can help you identify your strengths and weaknesses as a trader and work on improving your performance.

Trading Style Assessment: This type of assessment is specifically designed for traders and measures your trading style preferences, such as risk tolerance, trading frequency, time horizon, and market focus. Knowing your trading style can help you tailor your trading strategy and make better-informed decisions.

Emotional Intelligence: (EI) Test: EI refers to your ability to recognize and manage your emotions and the emotions of others. High EI is linked to better decision-making and performance in trading. An EI test can help you identify areas where you can improve your emotional awareness and regulation.

It’s important to note that while these tests can give you some insight into your cognitive preferences, they are not definitive or absolute. Forex trading requires a combination of both analytical and creative thinking, and successful traders often use both sides of their brains in their decision-making process.

How do left-brain and right-brain traders approach risk management, decision-making, and other important aspects of trading differently?

Left-brain and right-brain traders may approach risk management, decision-making, and other important aspects of trading differently based on their cognitive preferences:

Risk management

Left-brain traders may be more focused on quantitative analysis and may rely on technical indicators and mathematical models to assess risk and determine entry and exit points. Right-brain traders may be more intuitive and may rely on gut instincts and market sentiment to manage risk.

Decision-making

Left-brain traders may be more analytical and methodical in their decision-making process, while right-brain traders may be more creative in their market approach and intuitive. Left-brain traders may rely on data analysis and logical reasoning to make decisions, while right-brain traders may be more inclined to use their speculative instincts and discretionary trading abilities.

Market analysis

Left-brain traders may be more inclined to use technical analysis, and quantitative models to evaluate market trends and patterns, while right-brain traders may be more interested in using fundamental analysis, geopolitics, global macro, and other qualitative factors to assess market conditions.

Trading psychology

Left-brain traders may be more disciplined and systematic in their approach to trading psychology, using techniques such as goal-setting and discipline to stay focused and motivated. Right-brain traders may be more attuned to their emotions and may use techniques such as mindfulness, visualization, and meditation to stay centered and manage stress.

It’s important to note that these are generalizations, and individual traders may exhibit a combination of both, left-brain and right-brain tendencies. Successful traders are those who are able to integrate both analytical and intuitive thinking in their decision-making process and adapt to changing market conditions.

Regardless of cognitive style, effective risk management, decision-making, market analysis, and trading psychology are all essential components of successful trading.

Can understanding whether I am a left-brain or right-brain trader help me improve my overall trading performance, and if so, how?

While the notion of left-brain or right-brain dominance has been largely debunked, there is some evidence to suggest that different cognitive styles may affect how traders approach trading and make decisions.

However, it’s important to note that there is no one-size-fits-all approach to trading, and as mentioned before, the most successful traders are those who are able to integrate both analytical and intuitive forex trading thinking in their decision-making process.

That being said, understanding your cognitive style can help you identify your strengths and weaknesses as a trader and develop a trading style that aligns with your natural tendencies.

For example, if you tend to be more analytical and quantitative in your forex trading thinking, you may excel at developing and testing trading models and algorithms.

On the other hand, if you tend to be more intuitive and creative, you may be better at identifying market shifts and developing discretionary trading strategies.

To improve your overall trading performance, it’s important to focus on developing a well-rounded set of skills that includes both analytical and intuitive thinking, as well as risk management, trading psychology, and market analysis. Some strategies that may be particularly helpful for left-brain or right-brain traders include:

Left-brain traders: Focus on developing your analytical and quantitative skills through technical analysis, creating trading models and algorithms, and monitoring market data. Consider using tools such as spreadsheets and data-driven software to help you analyze and interpret statistical information.

Right-brain traders: Focus on developing your intuition and creativity through activities such as brainstorming new speculative ideas, exploring alternative trading strategies, and experimenting with new approaches to trading, such as; “correlation,” or “volatility expansion” trades. Consider using tools such as forex heat-maps or forex sentiment to help you generate new ideas.

Ultimately, the key to improving your trading performance is to be adaptable and willing to learn. By understanding your cognitive style and developing a well-rounded set of skills, you can become a more effective and successful trader.

Combining Left-Brain and Right-Brain Approaches

While both left-brain and right-brain thinking have their advantages and disadvantages, the best approach to Forex trading is to combine the two.

As discussed before, left-brain thinking provides structure and analytical thinking, while right-brain thinking offers flexibility, creativity, and intuition.

Therefore, the best approach to trading, in our opinion, is to combine left-brain and right-brain forex trading thinking. By using both analytical and intuitive thinking, traders can make more informed and profitable trading decisions.

To balance left-brain and right-brain thinking in the markets, traders should:

Develop a clear and structured trading plan based on analysis and logic.
Use technical indicators and charts to identify potential trading opportunities.
Pay attention to their intuition and emotions to make decisions based on market trends and changes.
Practice good risk management and be disciplined in executing the trading plan.

Here are some tips for combining left-brain and right-brain approaches to Forex trading:

Use Technical Analysis

Technical analysis is an important part of left-brain thinking. It involves the use of technical charts with indicators to analyze and identify potential trading opportunities. Traders who use technical analysis often use chart patterns, moving averages, and other technical indicators such as; market profile, order flow, and deltas, to help identify market conditions and their changes.

Incorporate Fundamental Analysis

Fundamental analysis is another important part of right-brain thinking. It involves the analysis of economic and financial data to identify potential trading opportunities. Traders who use fundamental analysis often look at economic indicators, such as CPI, Inflation, and Interest rates, to help identify potential market trends based on the Central Banks’ actions to various economic conditions.

Follow Market Trends

Market trends are an important part of both left-brain and right-brain thinking. Traders who follow market trends use both technical and fundamental analysis to identify potential market shifts. To be precise, fundamental analysis is being used for identifying emerging trends and taking advantage of market inefficiencies, while technical analysis, is for timing entries and exits.

Practice Patience

Patience is an important part of both left-brain and right-brain thinking. Traders who practice patience are more likely to make well-defined trading decisions. They take the time to analyze market trends from different perspectives before making solid decisions.

Manage Risk

Risk management is an important part of both left-brain and right-brain thinking. Traders who manage risk effectively are more likely to be successful in Forex trading. They use stop-loss orders, hedging techniques, and various risk management tools to help manage their overall market exposure.

Learn From Mistakes

Learning from mistakes is an important part of both left-brain and right-brain thinking. Traders who learn from their mistakes are more psychologically mature in their Forex trading. First, they document then, they analyze trading decisions and make adjustments to their trading strategies in a constructive manner.

Conclusion

In conclusion, Forex trading requires a balanced approach that incorporates both left-brain and right-brain thinking. Traders who rely solely on one approach risk missing out on potential opportunities or making emotional decisions that can lead to losses.

Left-brain Forex trading, with its reliance on data, analysis, and logic, is a structured and straightforward approach to trading. It is excellent for identifying patterns, interpreting technical indicators, and setting clear trading goals. However, it can be limiting as it may overlook certain market tendencies and changes that cannot be easily quantified.

On the other hand, right-brain Forex trading relies on speculative intuition, creativity, and emotional maturity. They can uncover opportunities that may not be evident from a purely analytical perspective, but it can also be risky as it can lead to overly impulsive and emotional decisions.

Combining both approaches allows traders to take advantage of the strengths of each and minimize their weaknesses. By using a balanced approach, traders can identify potential opportunities through technical analysis and also rely on their intuition to make informed and profitable trading decisions.

6 Forex Trader Types You Need To Know About: Uncover Your Tribe!

by Dave

image of the six numbers that describe the six forex trader types

The six distinctive forex trader types you need to know about when trading the forex market. Forex marketplace being the largest, the most liquid and the most leveraged financial Market is the place where forex trader types from all walks of life meet and compete with each other on a daily basis.

These speculators/traders utilize various trading strategies, all trying to predict the outcome of their bets. Employing different types of software along with using proprietary trading techniques, became the norm of their trading lives.

What are the different types of traders

Truth be told, there are six different types of traders, and each requires a unique speculative process. It doesn’t matter if you prefer to trade for the income or for the capital growth purposes, choosing the right trading style will definitely improve your chance of success.

However, first you need to know about these forex trader types to actually associate yourself with either one of them.

Day-trader

Day traders are buying or selling the financial instrument on the same day. Meaning, they will not hold their open trades overnight, when markets are closed. Their holding period varies from minutes, up to hours, but the closing has to happen within the very same day.

Day trading profits are closely related, or should I say, affected by the bid/ask spreads. The tighter the spreads are, the more successful is the trade, because every price increment that goes is in your favor, contributes to the overall positive outcome.

Second in line is the broker’s commission structure that also affects the bottom line.

The lower the expenses, the more profitable are the trades.

Day traders are often portrayed as a group of traders that makes lots of money very quickly.

They are sort of “Trading Gods” of the Industry. That is very far from being the truth…

Imagine, sometimes you have to make several trades during the day just to break even. It is a very intense trading approach that requires lots of screen time and is very energy consuming.

Hence, the day-traders may endure several financial losses in the beginning of their career, which often affects their mental state in a very destructive way. That is why, if you decide to start from this approach, you may never even reach a profitable stage.

Also, most of the day trading involves the use of leverage (borrowing money from a broker) to increase the returns. Because of that, day traders have to have an enormous discipline to hold up against the sudden market moves that may result in larger than expected losses.

Check out common Day-trading Mistakes:

Scalper

Scalpers are “scavengers” of the trading world. They make tiny profits repeatedly from the smallest market moves. Traders that use this type of market approach usually implement various short term strategies where the trades could last minutes and even seconds.

Basically, you are trying to capitalize on smallest price fluctuations, going long (buying) or going short (selling) one or multiple financial instruments simultaneously.

Scalpers may put anywhere from a few to multitude of dozen trades in the same day. Since they are opening and closing their trades before the market close, they are also considered to be in the “Day-trading” category.

Now, scalping is even more stressful than the day-trading, because whatever you’re required to have as a day-trader, on top of that, you’re also required to be very skilled in recognizing rapid momentum changes.

Both scalpers and day-traders are known to be an Intra-day speculator. Bottom line, scalping is the next level of the Day-Trading field, because it requires quick-thinking, lightning reaction, an enormous concentration.

Algo Trader or “The Quant”

Algo-trading, also known as the Quantitative trading requires the use of sophisticated computer programs that place trades within milliseconds, that is a thousandth of a second, to profit in the Financial markets.

The term is additionally used to describe the High Frequency Trading (HFT). Although, it is a part of the Algorithmic trading, the HFT’s completely rely on non-human interaction. While the Quants, on the other hand, may use semi-algorithmic approach to trade the markets.

As the name implies, algo-trading is for the people who are OK with making use of technology, and allow machines to take over their trading.

The Quants are data driven individuals and usually are the math geeks, or have an engineering background. These types of traders are very logical, looking for ways to minimize the emotional impact in trading.

Position Trader (Macro Trader)

Position trader also referred to as a Macro trader is a long-term market player. Why – Macro? Because, these speculators are driven by the local or the Global Macro Economic events. Mostly these types of traders are Trend originators and Trend followers. Meaning, they have the means and the resources to create long-lasting trends.

In general, they fall into the group known as “The Big-Boys.” Position traders hold their open trades for weeks to months, sometimes even years. Hence, they are not affected by the Intra-day volatility – the sudden market moves.

They have long-term Investment horizons than your average market participant. Because of that, they are able to achieve smoother profit curves, but at the same time, they have smaller overall returns over the aggressive trader types.

Swing Trader (Medium-Term Trader)

Swing trading is a style of trading that is geared towards capturing smaller trends, as opposed to the position traders. Their holding period could last for a day, and up to a week. These types of traders are not keen on fundamentals.

They are rigorous practitioners of Technical analysis, and mostly use patterns in their decision-making. Basically, they use technical analysis tools to help them formulate trading ideas.

Given that their holding period is much shorter that of position speculators and much longer that of Intra-day traders, I may say, this is the perfect style for the people that want to be more active in the markets, but at the same time don’t want to be involved in day-to-day speculative craziness.

News Trader, Volatility-Trader (Micro Trader)

News trader, also known as an event-driven trader prefers to fully take advantage of economic news releases that directly affect the currency prices. These types of speculators know exactly what news events or political developments are in correlation to drive the currencies directionally.

Usually, these traders are in and out of their positions when a particular news event or a certain political situation is being played out. However, they might hold their open trades much longer, if the event is in alignment with the position. Hence, some of the short-term news trades might become swing trades, or even transform into the long-term speculations.

Just to name the few events: Employment figures, Retail sales, Consumer Price Index, Manufacturing numbers, Elections, etc. One thing to mention, for this type of trading you’ve got to have a reliable and a very high-speed news source, because in this case, every second counts!

Also, check: How Knowing About The Stop Hunting Forex Can Make You A Better Trader

What is the best method to trade forex

Honestly, there is no definitive answer to this question, and here is why… What works for one trader doesn’t mean it will work for the other. It is up to the trader to determine his or her trading style based on their own psychological profile.

Some people prefer Intra-day trading because it suits their profile. They are naturally good under pressure, they are quick on their feet, and they adapt to market speed very naturally. Others prefer slower speeds, they are more analytical type, need more time to process information, need more time to “put all their ducks in a row.”

One of the key factors to consider is the time-period of your trading style. This all means that you need work from your end, first. You need to consider your personality and find the method that will fit, as the glove fits the hand, your profile – a perfect match.

Gladly, there are thousands of trading strategies to choose from, meaning you don’t have to come up with the unique one. The road has been paved for us by the traders that came before us, so all you have to do is do some poking and find the one that fits. Mainly though, all these strategies stem from one of the three trading approaches described below:

Trend-Following Trading

Trend following is the simplest and the most popular way of speculating in the markets. It implies following the dominant market tendency; buying the financial instrument when it breaks through a major supply area in the up-trending conditions, and selling a major demand zone in the down-trending conditions.

In a nutshell, you simply follow the dominant trends when they have been already established for some time, and not when they are in a development stage.

This can be possible when we have strong and prolonged trending conditions fueled by the Government (Fiscal & Monetary politics) or by the Central Bank Interventions (Rate adjustments, changes in currency Supply/Demand levels).

Trend following speculators, usually are the long-term traders because they have to stay with the trend for a long time. However, “simply” doesn’t mean easy!

For the trend-followers, increase in Volatility is the most devastating market occurrence. Imagine staying with the trend for several months, and enduring several market corrections against the dominant trend.

When markets are volatile, it becomes harder to believe in, and stay longer with the Trends. It takes a special mindset and an enormous amount of discipline to overcome these hurdles.

Counter-Trend Trading

Counter-trend methods, on the other hand, are trying to capitalize on the very same Volatility.

As the name implies, you are trading against the dominant tendency, catching these volatile corrections.

Counter-trend trading depends on the statistical fact that price breakouts do not always evolve into mature Trends.

Hence, a trader that uses this market approach, in essence, is trying to capitalize on the market retrace from the historic highs or lows. Usually, the counter-trend speculator will look for the major historic point of reference, to lean against it, in a hope of price bouncing from the level.

These traders commonly use support/resistance and supply/demand levels in their market analysis. Keeping up with economic releases is also very popular among counter-trend traders, as they are a great source of the above mentioned Volatility. Volatile market environment, offers an ideal situation to profit from the market swings.

For example, if the market has been trending for a prolonged time, then when the volatility picks up at the highs or the lows of the move it can lead to a “panic selling” in the up-trends, and a panic closing of short positions (corrective up-swings) in the down-trends.

Therefore, monitoring the market phases to catch that momentum shift, for the counter-trend trader is more crucial than for the other market players.

Market-Neutral Trading

The Market-neutral approach is geared towards avoiding some form of Market risk. This is done either by hedging the risk with other financial instrument in a different sector, or involves hedging the underlying financial contract with the use of common derivatives: options, forwards, swaps etc.

Market-neutral trading involves profiting from the market while it goes through different conditions. Whether the market goes up, goes down, goes sideways, the market-neutral strategies are geared towards either to offset the risk or even able to deliver positive returns.

For example, in Forex, you might be buying the British pound vs the US Dollar (GBP/USD) months before the Brexit, knowing that the closer you get to the vote, the more volatility will be expected. It might even be increased tenfold.

Hence, you hedge your exposure in the Options market by purchasing the put options contracts for the British pound to mitigate your risk.

The Market-neutral approach is also known as the Delta-neutral trading, where you’re trying to eliminate directional risk. Delta in financial markets represents direction, hence delta-neutral strategies, in essence, are directionless strategies.

You don’t care which way the market swings, either way, you make positive returns.

The logic behind it is this, you have to find two or more, positively correlated or negatively correlated trading instruments. For example, in the spot Forex market, we have positively correlated EUR/USD & GBP/USD trading instruments. The correlation is not 100%, but it gets very close, in certain market conditions.

Especially, during the major European-economic announcements. In such moments, delta-neutral traders will buy the EUR/USD pair and sell the GBP/USD pair, hoping that the win on one pair will offset the loss of the other, at some point in time. They are eliminating the directional risk, as they do not want to care which way the market swings after the actual vote.

Yes, you’re going to have a negative balance on one pair, and a positive return on the other.

The whole trick is, during a certain moment in time these two open trades will generate a positive balance in total. Once this happens, a trader needs to close both trades simultaneously to book the positive return.

Usually, this is done by the Algorithmic software, because this can happen very quickly, literally in seconds, for the humans to process and react. Now, for the negatively correlated pairs such as the USD/CAD & the CAD/JPY, better yet the EUR/USD versus the USD/CHF you simply buy both or sell both of the instruments. This type of trading is the form of statistical arbitrage.

The bottom line, the expression “delta-neutral” relates to a strategic trading method which intends to reduce directional exposure for hedging purposes or for capitalizing on increased volatility.

Here is the video explaining this concept in detail, whatever goes for the Stocks/Indices can be applied to the Currencies:

Here is the Inter-market Correlation Matrix:

How to Find Your Trading Approach

Well, to answer this question we would need to go to the basics of finding anything in our lives.

We would need to try different trading approaches, test numerous trading strategies, then get the feedback by answering the following basic questions:

What are my trading goals?

(Am I doing this for a part-time cash flow, for an Income substitute or just want to build Wealth year, after year…)

What is my time availability?

(Can I trade the European or the US session… maybe both…)

How do I feel about trading the long-term/short-term charts?

(Are long-term charts too slow for me…)

(How about the shorter time-frame speed, does it affect my mind…)

Is Technical trading, all that I need?

( )

Am I better at trading with indicators?

( )

You may fill in the blanks for yourself.

The list could go on, and on… and on…

These are the types of questions you’ll want to ask yourself to find out of what you really like, stay with it, and make it work.

I mean, there are hundreds of questions we can ask ourselves to narrow down the trading approach that will fit our personality, will fit our availability and will fit our ability.

I can’t emphasize enough, if the trading approach doesn’t feel natural, doesn’t feel right for you, then most probably it is not going to work!

You basically have to keep searching and testing until you find something that fits you.

And yes, it may take years and years of trials and errors before you crystallize into a successful trader. This is the main reason why Trading takes such a long time to master.

It is amazing, how people just jump into speculating without knowing their psychological profile, without proper education and without a substantial amount of screen time.

If something doesn’t work for you, how do you tackle the problem? Maybe you need to do some back testing of your trading strategy. You’ll be surprised to find out the things that need just few little tweaks, to become finally profitable.

Maybe you need to change the trading time frame, or trade specific forex sessions.

Maybe, consider adopting new methods. Choose two, maximum three and do some serious back testing. After you’ve narrowed, do forward testing in real time (about 30 trades max.), to see how the method is holding up in a real trading environment.

I know lots of traders that have adopted a trading style just on the basis of profitability. Heck, even I went through the same experience. Meaning, they have stuck with the method for so long, trying to make it work just because it has produced spectacular results for the other traders. Little did they know, it never matched their “trading spirit.”

Also, read: BUSTING THE MYTH OF A FOREX MARKET MAKER

Conclusion

The Forex marketplace is the home to many trading approaches and various trading styles. However, when looking at it with the “bird’s eye view,” these trading approaches & trading strategies mainly fall into most prevalent categories: short-term trader, medium-term trader, long-term market player.

Furthermore, all these categories with all their methods and their strategies stem from the three basic market approaches: Trend-trading, Counter-trend trading, and the Market-neutral speculations.

Choosing the right trading approach, then accordingly, the right trading style that fits your psychological profile is even more crucial to the aspiring forex speculator than, just choosing the right trading time-frame or the right trading instrument.

There is a number of unique elements within these classified groups that could contribute to one’s bottom line success. Each and every speculator will have to consider some of these crucial fundamental factors that impact trading on a personal level.