Is it wise to rely on Forex only?
- Thread starter Waylen
- Start date
That’s because either:
- your strategy doesn’t have an edge, or
- you’re making mistakes and not executing according to your edge, or
- you're not managing risk
Forex is very generous market, however it has its own nuances that you need to be aware. It just trades/behave differently than stock market.
There are many ways to trade the FX, plus there are many timeframes to chose from, just don’t get sucked into very low timeframes such as M5.
M30 – H1 timeframes are reliable and offer many trading opportunities each week
Be careful with the choppy CHF cross pairs, it’s better to stay away pairs like that.
You can do some research into a high probability strategy that is based around the London session closing time when the market is slowing and when at the same time the daily ATR is extended. During such scenarios you can just place limit orders at specific, obvious extended levels, and do mean reversion trades.very
Another very reliable way to trade FX is to learn to read supply and demand, it works very well in FX, major stock indices, and commodities.
Just stay away from indicators, learn to read which levels are likely to hold, and the learn to read reversals from such levels or false breakouts at those levels.
You can slowly start building strategies around that, and then do lots of manual back testing to create a confidence.
On November 28, 2023 I started a thread where my plan was to seek out a method of swing trading the Forex market profitably.
Then on December 13, 2023 I wrote: "I am satisfied that the approach to swing trading I've adopted over the last few days is valid and reliable, but is NOT able to guaranty that trading opportunities will present themselves each and every day..."
However, on February 24th of this year, I challenged myself with the task of using "the following observations to implement an approach to swing trading that IS able to guaranty DAILY trade opportunities."
I am presently in the middle of that process, and if successful, obviously any methodology with an outcome of daily profits would essentially guaranty making profit every single month.
TrendSpider states that "Price action refers to the movement of a financial asset's price over time... Price action traders analyze historical price data to identify patterns and trends that can help predict future price movements."
But it's my view that I have a system which evaluates/analyzes the movement of financial assets in time rather than over time, so that I can interpret current price movements as opposed to predicting future price movements.
If true, then the month of March (this month) should be my most profitable month to date.
I think if a trader has sufficient knowledge and experience, it can be a good and advisable, but we should diversify our investments and proceed cautiously.
With the number of currency pairs in the Forex market, I don't see why you can't focus on Forex solely. If you look at currency pairs relative to one another instead of in isolation, you see a trading opportunity frequently.
I see lots of ET contributors attesting to the difficulty of making money trading Forex, but personally, I find it a lot easier (i.e., faster) to make money going that route than stocks. (I can't compare it to options, since they represent an asset class I've never traded.) Even so, if I ever end up generating a massive amount of capital, I'm sure that at that point, I'll probably go ahead and diversify.
Moreover, from what I understand, Warren Buffet is worth $134 billion, whereas George Soros only gave away around $32 billion before leaving himself with a "modest" $6.7 billion. And even then, that $32 billion doesn't compare to the $44 billion Buffet has donated from his pot. And yet for some reason, csmonitor.com says: "George's track record is better (but Warren is richer)."
And as for poor Jim Simons, he's only worth $30.7 billion. However, Jim didn't get started until 1978, as opposed to Warren, who got started in 1957. George too got a late start compared to Buffet, since his first fund was established in 1966, and his second in 1969.
Nonetheless, when all is said and done, though I personally would think it'd be easier to get super rich via Forex vs. Stocks, reality appears to say otherwise.
But wait! I just read an article put out by gobankingrates.com, and they state that Warren "hit $32.3 billion in 2001 and climbed to $62 billion by 2008. However, the financial crisis meant Buffett took a big hit, just like everyone else, with his net worth falling to $37 billion in 2009."
So, even he didn't become super, super rich until the last 15 years. Is it possible that Jim Simons' Medallion Fund will do the same? Perhaps the amount of time spent in the markets is more important than I thought.
Not to mention that according to Yahoo Finance: "Buffett's primary source of wealth is his ownership of Berkshire Hathaway. The company has seen impressive growth over the years, with a notable increase in share price in 2023. This growth has significantly contributed to Buffett's wealth."
Last edited: