The Investor Diary Entry #50: September 24, 2023
To get a good answer, one needs to ask a clever question. If one is asking “What is the best forex trading strategy,” this person is fishing for a scam answer.
We have learned from various life examples that there is nothing “best” in anything in life. People succeed in ways that are suitable to their own specific individual factors.
Copying what other people are doing is an excellent way to learn a new skill, but it is not the path to success. The path to success is drawn by designing a methodology that suits the person in question.
In trading, there are two major methodologies; technical analysis and fundamental analysis. Does that mean one needs to choose one over the other? The answer here could be “yes.” It can also be “no.” The answer that I like to this question is “not necessarily.”
Understanding Where You Are On The Learning Curve
I have repeatedly mentioned that I was introduced to the world of trading in 2004, and stopped live trading in 2011. I stopped because I realized that my whole approach to trading was not something structured. I was all over the place, and I couldn’t find a way to learn to trade the right way.
In May 2023, I stumbled into a local company that trains Forex Trading. I took their basic course. What I took away from the whole course are two main pillars; risk management, and the Reward Risk Ratio (RRR).
I always had a problem identifying my stop loss levels in trading. I even tried following a school of not using a stop loss. By understanding the concepts of risk management and RRR, I was able to conclude how to use a stop loss.
I have read many articles and watched many videos about risk management in trading, but I could not sink that information in until I took this offline course.
According to the instructors of the above-mentioned offline course, they claim that one can succeed in trading just by being highly disciplined in following the risk management and RRR rules that you set for yourself. They even joked that you can flip a coin in trading and eventually profit if you follow these rules.
Today I am using support and resistance levels as a basis for my trading. I am still not good at identifying the price actions on such levels, therefore, I am at a level where I am still searching for the trading strategy that best suits me.
Support And Resistance Levels In Forex Trading
Any trader who succeeded in creating profits using a particular strategy would label this strategy the best Forex Trading strategy. One cannot say that this trader is wrong, but he is not right either.
This trader was able to identify a strategy that best suits his/her style. He can teach it to others, but not all those who are taught will share the successful outcome.
Support and resistance levels in forex trading is the methodology that I understood the most among the different methodologies that I was exposed to. My trading with this methodology was not successful at all until I coupled it with some other indicators that are available on Tradingview.
The Forex Trading strategy that caught my attention was within what is called Smart Money. It is called Order Blocks. When it was first introduced to me, I tried it a few times and it worked every single time. Then things got confusing for me, and stopped being able to identify them and profit from them.
When I tried to spot them again, I lost the trade every time I tried; therefore, I dropped it. I need to wait until I can find a way to learn this methodology clearly.
What Forex Trading Strategy I am Looking For?
As I said before, trading on support and resistance is still a guesswork for me. I am not able to feel the price action correctly around the support and resistance levels.
When I see a level break, it bounces back, and when I see a bounce, it breaks through. My trading got better when I coupled the support and resistance with an indicator that predicts the future price movement based on sampling the recent past price actions.
I made six trades in the last two weeks using the above methodology. I got 4 wins and two losses with an RRR that exceeded 2.5 and in some trades reached 7.
Here is the point of this whole article. Yes, I am very happy with this win rate, but I am not very comfortable with the trading methodology. I feel very dependent on the indicator, which does not make me feel comfortable. This indicator is made by someone. This person will eventually stop maintaining this indicator; accordingly, there will come a time when this indicator will stop being useful, and I will be hit several times before, I realize that I need to find something new.
I am looking for a strategy that depends on mechanical signs on the chart. I don’t mind using indicators, but they need to be general indicators and not being developed and require continuous maintenance by the developer. I want the indicators to translate the current price action, and the signs for me to identify and not some indicator.
How To Look For A Suitable Strategy?
What I am doing now is reading books that talk about technical analysis and presenting different strategies and methodologies.
Today I have two books that talk about different technical analysis methodologies. I started reading the first one. Once I finish those books, I am hoping that I will have a tendency towards one of those strategies. Once I find this tendency, then I will get into books that talk more in-depth about this particular methodology.
In a previous entry, I mentioned the list of trading books that I found traders recommending if the reader of this diary is interested to know about it.
Conclusion
One thing that I believe in is that there is no best anything in absolute terms. The same goes for the best Forex Trading Strategy.
I would discourage anyone from searching for what is the best Forex Trading Strategy, the best investment methodology, or the best online business. Those terms can get someone lost in a never-ending loophole.
The best way is for one to be exposed to different strategies and methodologies, then design something that this person is most comfortable with and achieve the targets set for this person.
Sunday 24 September 2023
About The Author
I started to look into individual stocks in January 2022. I created this diary initially for myself to track my investing progress, and second, as a place where I can share my ideas publicly hoping that others will share their ideas and learn from each other, and lastly, as an online business where some links that I share are affiliate links, and if anybody bought anything by clicking those links I will get a commission based on that successful sale, which of course will not affect the price that you are buying the product or service at.
For more detailed information on my affiliate disclosure please refer to the Full Affiliate Disclosure page, and if you are interested in building your own online business you can check this post here.
Furthermore, this site is in no way or form giving any financial or investment advice, nor it is encouraging or discouraging people to buy or sell any financial instrument. This is a personal diary in which I track my progress and share it for informational, educational, and entertainment purposes.