subject: Trading Forex In 2011 - A Few Useful Tips [print this page] I have been making some decent profits from forex trading for a good few years now, and I hope to continue doing so in 2011. However market conditions can quickly change, and so I thought it was worth discussing how you can successfully make money in 2011.
The first thing I should point out is that from a day trading point of view, the average daily trading range for the major currency pairs is actually quite small at the moment compared to earlier in 2010. This is partly due to the reduced volatility that you always get at this time of the year, but we have also seen quieter markets in the last few months as well.
If you look at the movements of the GBP/USD, EUR/USD and USD/JPY pairs recently, you can see that there has been a lot of sideways movement. So if this trend continues into next year and the average daily range (as indicated by the average true range indicator) remains quite small, then it will be quite hard to make consistent profits if you are a short-term trader.
For instance if you are a breakout trader and like to trade the GBP/USD pair, then there may be little point trading any breakouts if the current day's trading range is more than 100 points. This is because the average daily range (at the time of writing) is a mere 135 points. In contrast, it would have been a lot easier to trade these same breakouts earlier in the year because the average range was more than 200 points at one stage.
So what I am basically saying is that until the markets become more volatile (which they surely will at some point in 2011), it may be worth switching to longer term strategies instead. I myself like to trade the 4 hour and daily charts and this tends to work well regardless of the current market conditions. Therefore there is no reason why you cannot make money from this style of trading in 2011.
You don't need an overly complicated system with lots and lots of different technical indicators. I use a simple EMA crossover system, which comes up with far more winning trades than losing ones.
Whatever system you come up with, you should find that technical analysis always works better on the long-term charts. So if you devise a strategy that keeps your losing trades to a minimum and employs a tight stop loss whilst letting winning trades run for as long as possible, you should do very well.
Indeed my best tip for anyone trading forex in 2011 is to focus on longer term strategies. They tend to work better anyway, but this is particularly true when the daily trading ranges are small, like they are at the moment as we go into 2011, and day trading becomes a lot harder.
