A lot of companies are promoting their amazing, foolproof forex strategies these days, but how many of them actually work? It’s hard to answer this question without taking an extensive research and even then you might not have the perfect answer. So, how do you start trading forex with the strategy that works?
Which Forex Strategies Can Make You Money?
The fact is that there is no-one on the planet who can claim that they have guaranteed forex strategies that will make money. All forex traders are operating in a real-life, global market that is influenced by the actions of other traders. Those markets are unpredictable just by virtue of being influenced by so many people. Educated traders can make very well-informed guesses about how the markets will move – but they are still just that – guesses.
The best strategies for trading forex are ones that operate based on an understanding of how the markets have moved in the past. Traders can look at current trend lines, and then try to understand what that means for the future. These strategies are based on something called technical analysis, and they are a sound starting point for any would-be trader, not least because platforms such as Meta Trader have built-in charting features that will make it easy for you to create overlays to inform your decision making.
Some people do decide that it is too difficult to make their own trading forex decisions when they are first entering the world of forex. They lack the experience to make sound decisions based on fundamentals such as PMI or GDP data, and they don’t really have the confidence to work with the technical analysis information, so they subscribe to signals provided by experienced traders instead.
Trading Forex Manually?
Subscribing to a signals provider effectively lets them run your account for you, which is just one of many forex strategies traders use. The signals provider will make trades and your account will follow them within the spending limits that you have set. This is putting a lot of trust into a stranger. You can usually monitor and over-ride the signals if you are willing to put the time into watching the account and manually action trades, though. If you do this, then you will learn a lot while following the provider, since you can think about why they might have made that decision, and whether or not you agree with it.
Another way to practice your forex strategies is with a demo account. Don’t fool yourself into thinking that you are ‘making money’ if you are using a very high value demo account and you have run at a loss for ages then made a huge amount on one lucky trade. Set yourself realistic spending limits for the demo account, and work with it as if it was your own real money. This is how you will see whether you are really cut out to do well at trading forex. The closer the trading conditions are in the demo account to your real account, the better. It is common for demo accounts to have more generous pip values, to suck traders into thinking that they are doing better with their account than they really are. Watch out for this so you aren’t caught by surprise when you trade for real.