To have a winning trading strategy a trader should choose the strategy that he is comfortable with and that best suits his personality.
In the end the type of strategy that a strategy trader will choose will be the strategy that best fits the personality of the trader. There are many trading strategies that fit different types of market landscapes. Firstly the strategy trader has to choose which market conditions he wants to trade in and then choose the strategy that compliments the conditions and his personality. It is therefore pertinent that the trader is aware of different types of strategies so as to choose the right strategy for the conditions he wants to trade in.
Trading as a Business- A Winning Strategy Profile:
Keep in mind that switching from one losing strategy to another does not help in establishing a winning strategy. As a business person, you have to develop and market your own winning strategy profile. This should be based on your skills, knowledge and personality. The essential ingredient for this is the market condition as well as the trader behind the specific strategy. As a business person however, you need to keep in mind that these are not created in a vacuum. Rather you have to understand the environment you intend to apply them and whether they work or not. These strategies should be tested first before they are applied and evaluated to see whether they have the ability of delivering the desired results. Note that successful business people don’t follow strategies set up by others. It is for this reason that it is imperative to establish individual winning strategies.
When trading keep in mind that one size does not fit all. There are some strategies that will work on one thing and not another and for this reason, finding the best strategy for a specific business is important. The financial markets for instance, are volatile in nature and extremely dynamic and it is for this reason that as a trader, it is important to have a specific trading strategy. Understanding the market landscape is what a successful winning strategy is all about and it also makes it easier to come up with a set of profit goals and a comfortable risk tolerance. To accomplish this however, it is important to understand how to evaluate available trading strategies, understand the market, and develop and test the different trading strategies.
There are essentially only three forex market conditions and these conditions form three diverse chart patterns which reflect the market action. These three conditions are classed as a volatile market, a directionless market and a trending market.
The characteristics of a volatile market (see chart below) are very sharp changes in price both up and down. The trader who trades in volatile market conditions would be out of the market most of the time as the trades would be short lived and designed to make small profits per trade.
Volatile Price Chart
A directionless market on the other hand shows a price range that is very small from the high to the low over a period of time. The trading strategy for trading in such a market is what is called swing trading where the trader calculated the support and resistant points on a price chart. The trader would sell when a resistance point was hit and buy when a support point was reached.
Directionless or Sideways Trend Chart (40 pip range)
The trending market is one in which the price chart is one directional either showing an upward trend or showing a downward trend. The strategy here is to be in the market and take a position according to the prevailing trend and keep the position until the trend turns.
Trending Price Chart
A trader should choose the strategy that is best for his temperament. However, it’s worth bearing in mind that most traders use trend following strategies.
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