Forex Trading - Determining Your Own Trading Style

Forex trading is attracting more and more people because of one simple reason - it offers people the potential to make a lot of money

. However you can't just open a forex account, start trading the markets and expect to make money. It's a lot harder than that unfortunately. You need a plan of attack, and an important part of that process is determining your trading style.

The fact is that everyone is different and there is no single way to make money from the currency markets. For instance you can became an expert in economic matters and focus on taking long-term positions which take months (or years) to unwind, or you could go the opposite way and trade the short-term charts such as the 1 and 5 minute charts.

I personally fall somewhere in the middle because I like to trade the 4 hour and daily charts, but you have to find which time frame is best suited for you. If you are an impatient person, then long-term trading probably isn't for you, but if you have a full-time job for example, and therefore have limited time to trade during the day, then you may find that long-term trading is much more appealing.

There are also other factors you have to consider. The main one is of course the trading strategy you intend to use. If you already have access to a profitable trading strategy or have developed your own, then you are extremely fortunate because this is something that most traders never manage to do. It's worth noting that the longer the time frame you use, the easier it is to generate a winning strategy in general.

I personally would always recommend that you stay away from the shorter time frames because these are very difficult to trade. This is because there are a lot of random price movements on these short-term charts, and the trends are often quite small when they do occur.

So it's always worth bearing in mind how your personality will affect your trading, and then to try and come up with a strategy that suits your overall personality. You will often find out what kind of trading personality you have by trading with a practice account first of all.

It's worth testing to see how you perform trading the various different time frames. Some people are ideally suited to the quick thinking and quick responses that you need to scalp the markets, whilst others are very analytical and are better at finding high probability set-ups on the longer term charts. There are lots of ways to tackle the markets, but determining your style of trading will certainly help you to achieve your long-term profit goals.

Forex Trading - Determining Your Own Trading Style

By: James Woolley

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