Trend Following in The Forex Market
For those who are seeking success in the Forex Market, there is really only one proven concept. That is trend following. Trend Following works in every asset class over time ( with strong discipline and patience) such as commodity trading, futures trading, stock trading and forex market. The basic premise there is a break down or break out and the trader enters his/ her position. What differs in many cases is the time frame. There are those who are glued to the computer screen trying to day trade the forex market. In all honestly with all my years of commodity trading and investing, I have yet to find anyone who has invested in this manner who has succeeded long term. Even more than that…there are times in which there are no trends in forex, regardless with all the crosses potentially in the forex market. There are commodity trading advisors who have special funds considered financials and currencies. When there are moves, these commodity trading advisors can have big profits..however I have seen very long flat periods and sustained draw downs.
In my professional opinion one should always have forex and currencies as an option in a large group of potential markets. The key to long term success with commodity trading and forex market is to make yourself available when there are trends. The best way we know how to do this is trade tactically. This means, we use a rate of change & relative strength to determine the strongest markets and weakest markets. This becomes our universe, thereafter we use multiple systems for entries and simply trend follow if a trend develops. One never knows when they put on a trade… it is 50/50. More so, the majority of the trades don’t work. That does not matter as we have numerous small loses…and occasional LARGE PROFITS. Year in ..year out..there are bull markets and bear markets in all the commodity markets and forex market. Currently there is an interesting sugar trade which has been nicely profitable. Maybe this is a sign of inflation on the doorstep?
Some people trade the forex market as entertainment. People trade the forex market because they think they will get rich overnight. Both of these are wealth destroyers. If you want to compound your way to wealth consider trend following and have patience and discipline. Commodity trading is one of the easiest yet hardest to achieve. Surround yourself with people that understand risk and money management. Find a quality financial advisor or commodity trading advisor. There are thousands of both, yet very few have the experience that they truly understand risk.
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Futures and commodity trading involve substantial risk.People can and do lose money trading.