The volatility of the dollar against the euro and other major currency pairs has made foreign trade very popular, but the influx of new entrants has often clashed with the loss of money. But why many operators are unable to succeed in forex trading?
Very often operators work with the common business strategies, but they have limitations that few understand.
Were going to see in this article why some of the most popular currency trading strategies fail and, more importantly, how to solve this problem.
Many forex trading strategies are unable to benefit due to two main reasons. The first is due to the poor money management techniques, the latter is mainly due to adverse market conditions.
The first pointis quite simple to understand, since a good money management means to let profits run and cut losses shortly. An incalculable number of technical trading advise to do just that, but every time there are few who actually manage to implement these recommendations.
The second point is less mentioned but it is equally important. Trading strategies tend to have lower performance than one would expect in certain areas of the market. If we can recognize the limits of a strategy under certain circumstances then we can understand how to work to protect and preserve profits in adverse market conditions.
It is possible to make a ranking of trading strategies in many different groups, but to better understand this concept is useful to consider examples of going to different trading styles applied to different market conditions. In the next article we will see how far we can understand whether a trading strategy is optimal or less in a market and therefore whether or not to use it.