Any aspiring forex trader will tell you how easy it is to become complacent once you find that elusive trading strategy that is able to generate profits on a consistent basis. However this can lead to problems due to the fact that just because a particular trading method is profitable today, does not mean it will be profitable in the years to come.
The simple fact is that market conditions can change very easily, and as a result of this you will often find that your invincible trading method may suddenly start under-performing. It may even start losing money.
To demonstrate this point you only have to look at arguably two of the most popular pairs, the GBP/USD and the EUR/USD. In 2008 these pairs had an average daily trading range of 222 and 177 points respectively. However at the time of writing this has fallen dramatically to around 120 points for both of these pairs. So anyone who had a profitable day trading system back in 2008 may not be anywhere near as profitable in today’s markets.
Another reason why you shouldn’t necessarily rely on a single strategy is because you are potentially missing out on a lot of profitable trading opportunities. This is because if your system is designed to trade certain criteria, then you may face long periods of time on the sidelines if the major currency pairs do not satisfy these trading conditions.
For example if your trading method is based on identifying breakout opportunities, you may be stuck on the sidelines for weeks on end if the major pairs are confined to a narrow trading range. So during this time you could still have been generating a few winning trades if you had had some kind of system in place that trades highs and lows within a trading range.
The fact is that you can make more money by having specific strategies in place to trade different market conditions. So as well as having some kind of breakout system in your armoury, you may like to develop some trading methods that are able to trade trend reversals, as well as range-bound markets for when the markets are fairly quiet.
So basically what I want to point out is that you should never be too dependent on one single trading strategy. Not only are you potentially missing out on other trading opportunities, but you are also putting yourself at risk because there are no guarantees that your system will continue to be successful in the months and years ahead.
Click on the following link for more forex tips and strategies and to discover the exact 4 hour trading system that James Woolley uses to trade the markets:
Latest posts by admin (see all)
- How To Trade The Fractal Indicator - April 3, 2017
- How to Use Candlestick Patterns to Start Winning More Trades - March 19, 2017
- Weekly Review Strike 3.0 - December 16, 2016
Winner’s Edge Trading, as seen on: