Forex traders are often told to use simple trading strategies, but it can be somewhat confusing to distinguish a simple forex trading strategy from the myriad of complicated strategies out there. Therefore, it is imperative to your success as an investor or as a trader that you understand exactly what factors should be present in order for a forex trading strategy to qualify as not only “simple” but also “effective”. So without further ado let’s examine some of the factors that any simple and effective forex strategy should possess.
• Not Heavy on Lagging Indicators
This is perhaps the most important factor of a simple and effective forex trading strategy. Lagging indicators can be like a double edged sword of most traders, in that they seem simple enough at first but once you start use them you begin to think they are more important than the actual chart behind the indicators. Once this happens you are essentially forgetting to analyze the most important aspect of any financial instrument, that being its price chart, and instead are attempting to make your trading decisions based off a derivative of the more significant price data. Generally speaking, moving averages are the only useful lagging indicator in that they do a good job of showing dynamic support and resistance levels, in other words, they do a good job of pointing out the average or “mean” price over a set period of time.
• Easy to Understand
It shouldn’t take a PHD in calculus to understand the forex trading strategy you are using. As a general rule of thumb, if you have to do extensive amounts of math or computer programming to trade a particular forex trading strategy, it is probably not worth your time or money. Traders have an inherent human tendency to want to over analyze the market due to a belief that making money from speculative should be far more complicated than it truly really is. Any professional forex trader will admit that they use a simple and effective forex trading strategy that is not difficult to explain to others. In fact, aspiring traders are often taken by surprise when they meet an “actual” professional trader because of the simplicity of the forex trading strategies they use.
• Not Super Expensive
A simple yet effective forex trading strategy also should not be super expensive. The bottom line is that anyone who is trying to sell you some fancy sounding trading “robot” or lagging indicator based system at some ridiculously high price is only doing so because they themselves do not know how to trade profitably. It is a safe bet to say that any forex trading strategy that is selling for over $1,000 is probably a huge scam. There are certainly some less expensive forex educational courses that are well worth the money being asked which teach very simple and effective trading methods. Typically such courses are written by experienced traders who actually make money in the markets but also like to teach and help other traders due to the sea of forex scams out there.
• Not Heavy on Lagging Indicators
This is perhaps the most important factor of a simple and effective forex trading strategy. Lagging indicators can be like a double edged sword of most traders, in that they seem simple enough at first but once you start use them you begin to think they are more important than the actual chart behind the indicators. Once this happens you are essentially forgetting to analyze the most important aspect of any financial instrument, that being its price chart, and instead are attempting to make your trading decisions based off a derivative of the more significant price data. Generally speaking, moving averages are the only useful lagging indicator in that they do a good job of showing dynamic support and resistance levels, in other words, they do a good job of pointing out the average or “mean” price over a set period of time.
• Easy to Understand
It shouldn’t take a PHD in calculus to understand the forex trading strategy you are using. As a general rule of thumb, if you have to do extensive amounts of math or computer programming to trade a particular forex trading strategy, it is probably not worth your time or money. Traders have an inherent human tendency to want to over analyze the market due to a belief that making money from speculative should be far more complicated than it truly really is. Any professional forex trader will admit that they use a simple and effective forex trading strategy that is not difficult to explain to others. In fact, aspiring traders are often taken by surprise when they meet an “actual” professional trader because of the simplicity of the forex trading strategies they use.
• Not Super Expensive
A simple yet effective forex trading strategy also should not be super expensive. The bottom line is that anyone who is trying to sell you some fancy sounding trading “robot” or lagging indicator based system at some ridiculously high price is only doing so because they themselves do not know how to trade profitably. It is a safe bet to say that any forex trading strategy that is selling for over $1,000 is probably a huge scam. There are certainly some less expensive forex educational courses that are well worth the money being asked which teach very simple and effective trading methods. Typically such courses are written by experienced traders who actually make money in the markets but also like to teach and help other traders due to the sea of forex scams out there.
