These Three Forex Strategies Sound Good – But The Facts Are Not
There are many Forex strategies that sound good, but in practice they are not reliable. Although this strategy is actually very possible to succeed, but this strategy is not proportional to the problems and risks of losses that will be experienced. Here are three Forex strategies that sound good – but the fact is not.
CROSSOVER MOVING AVERAGE
One of the most common Forex strategies and sounds very good is the Crossover Moving Average strategy. A strategy can certainly work as time goes by. Crossover Moving Average system problems depend on clear and definite trends. If you’ve been trading for some time, you’ll know if the market trend is only about 20% of the time. Therefore, this strategy means that you must be able to receive some losses before getting a really good trade.
An idea of the average change that will cause a crossover movement, indicating a change in momentum. Once you do that trading, you will not be out until the average moves cross each other, giving each other a signal and momentum. In addition, you also have to deal with the psychological aspects of receiving so many losses before finally making a profit. Very few traders can and can do this.
MARTINGALE FOREX STRATEGY
Another common and really good-sounding Forex strategy is known as the “Martingale strategy”. Although not a trading system in and of itself, the idea of this strategy is done gradually to increase the size of your position. The basic premise is that you take a certain percentage risk, say 1% of your account on the first trade. Second trading, assuming that you lost the first trade, the risk will be increased to 2%. This way over and over until you finally win. The biggest problem with this system is that you can continue to lose money. Before you know it, maybe you have lost half of the funds in your account.
BLACK BOX STRATEGY BLACK BOX
Another common Forex strategy but not so helpful is the black box strategy. This strategy looks mathematically promising, they cannot react and adjust to what is called the “Black Swan event”. What does this mean? If the current market is affected due to some political events in Asia, the black box system will continue to run trading based on its mathematical model. One of the biggest explosions in history is from a fund called Long-Term Capital Management that practices this type of trading. In short, the bond default in Russia makes the market panic. The LTCM model is not ready to deal with this, even though they have made profits before that. This system will only make you lose large amounts of money and is one of the biggest disasters in trading. By the time it was over, the New York Central Bank had to set up a $ 3,625 billion bailout to save the findings because this was a serious systemic risk to the financial world.
As you can see, there are many ways to lose money in Forex trading. Forex trading business is difficult, and there is no shortcut, apart from some experts you may trust. One thing about the bad Forex strategy is the effort to simplify trading too much or make it really mechanical. If you are willing to see an easy way out, chances are you will find a more reliable Forex strategy that will keep you afloat.