One of the biggest benefits of trading in forex is that the market cannot be cornered by any single entity. A direct consequence of this fact is that there is no trick, technique, or strategy that can completely dominate the forex market. Unfortunately, most new traders take a lot of time to realise this fact about forex trading strategies.
They struggle through various conditions in the market and lose a lot of money because of their beliefs before realising that even the best forex strategies have to fail sometime. Consider the following.
The Lure of Perfect Forex Trading Strategies
It is important to study why forex traders get sucked into believing that there are perfect forex trading strategies. The reason for this is partly their inexperience in the market and partly their desire to believe that such a perfect solution exists in the market.
Inexperience means that the trader has not seen a lot of the market, which, in turn, means that he or she has not yet come across a situation where the market conditions have changed drastically.
The desire to believe that such a solution exists is simply based on the trader wanting an easy method of making a lot of money where he would not have to put in a lot of effort.
Unfortunately, there are no perfect forex strategies. Here are some reasons why.
The Nature of the Trader Matters
Even if you find forex trading strategies that rake in profits for a trader, you should be wary of blindly adopting them because it is highly likely that you will not get the same result as the other trader.
This happens because different strategies suit different kinds of traders. What this means is that the strategy that you choose has to suit your personality or you would be unable to profit from it.
The Skills of the Trader Play a Role
Sometimes, traders are also unable to bring the best out of the forex trading strategies that they have chosen. Different types of strategies require different levels of skill.
Therefore, if a strategy is working for a trader then it is possible that he has the skills to use the strategy properly. Therefore, every time you are tempted to adopt an expert trader’s strategy, make sure that you have the skills to use it properly as well.
The Market Conditions Change
It is also possible for a strategy to stop working entirely. All forex strategies are designed for certain market conditions. Thus, if the market conditions change then the strategy may stop being as effective as it was earlier. Skill plays a role here also because the successful strategy may just require minor tweaks to become successful in new market conditions as well.
The Targets of the Trader Differ
Strategies are also designed for different targets. For instance, the forex trading strategies employed by traders with large accounts can have huge drawdowns that may not be suitable for a trader with an account with small starting capital.