(Some of) The Complexities of Trading Forex

Filed under: Forex Training |

Trading the forex markets can be as complicated or as simple as you want to make it. However, regardless of how complicated or how simple your trading methodology is, there still is a whole host of decisions that you will have to make.

 

Some of the technical complexities include working our your lot sizes based upon what level of risk you want. You will have to do a bit of math to work this out. Personally, I have set up an Excel spreadsheet, which does the calculations for me. I just input the price, stop, target, and risk level, and it tells me how many lots I should be trading on a particular currency pair. This is not too difficult to set up with a basic knowledge of Microsoft Excel and some basic math skills.

 

You will also constantly need to decide things like risk-reward scenarios, whether to set trailing stops, whether to take profits, or whether to go to breakeven once you are in profit. All of these things will ultimately affect your profit potential, and figuring out what is the best thing to do is not an easy task.

 

One way you can do this is by analyzing large chunks of historical data and seeing what the results would have been in the past with various trading strategies. The best way of course is to do a live test – but this can be even more time consuming.

 

It might seem that as soon as you have figured out your methodology, that something happens to make you doubt that it is the best course of action, and then you inevitably start tinkering with your system. However, it is probably best not to tinker very often, and to see how things play out over a long series of trades first.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>