Choose Your Forex Trading Style

Choosing Your Trading Style

1> Determining what trading style fits you best

2> Understanding the different trading styles

3> Developing and maintaining market discipline

Before you get involved in actively trading the forex
market, take a step back and think about how you want
to approach the market. There is more to currency trading
than meets the eye, and we think the trading style you choose
is one of the most important determinants of overall trading
success.
We’re frequently asked, “What’s the best way to trade the
forex market?” That’s a loaded question that seems to imply
there’s a right way and a wrong way to trade currencies.
Unfortunately, there is no easy answer. Better put, there is
no standard answer — one that applies to everyone.

offer every trading style (long-term, medium-term, or shortterm)
and approach (technical, fundamental, or a blend). So
in terms of deciding what style or approach is best suited to
currencies, the starting point is not the forex market itself, but
your own individual circumstances and way of thinking.
Real-world and lifestyle

considerations
Before you can begin to identify the trading style and approach
that works best for you, give some serious thought to what
resources you have available to support your trading. As with
many of life’s endeavors, when it comes to financial-market
trading, there are two main resources that people never seem
to have enough of: time and money. Deciding how much of each
you can devote to currency trading helps to establish how you
pursue your trading goals.

If you’re a full-time trader, you have lots of time to devote to
market analysis and actually trading the market. But because
currencies trade around the clock, you still have to be mindful
of which session you’re trading, and of the daily peaks and
troughs of activity and liquidity. (See Chapter 1 for tradingsession
specifics.) Just because the market is always open
doesn’t mean it’s necessarily always a good time to trade.

If you have a full-time job, your boss may not appreciate your
taking time to catch up on the charts or economic data
reports while you’re at work. That means you’ll have to use
your free time to do your market research. Be realistic when
you think about how much time you’ll be able to devote on a
regular basis, keeping in mind family obligations and other
personal circumstances.

When it comes to money, we can’t stress enough that trading
capital has to be risk capital and that you should never risk
any money that you can’t afford to lose. The standard definition
of risk capital is money that, if lost, will not materially
affect your standard of living. It goes without saying that borrowed
money is not risk capital — you should never use borrowed
money for speculative trading.