Keeping everything simple is a nice strategy in almost all types of activities. Sometimes, simplicity is the only way to become profitable in Forex trading. Of course, not everyone likes to keep everything simple and not everyone should do that. However, simplifying some basic aspects of Forex trading will help you to avoid unnecessary problems and complications:
- Simple trading strategy can be as profitable as some really complex systems. By keeping your strategy simple, you make it easier to follow and execute. Adding complexity in the future can be your next level, but trading with a simple strategy is a very good way to start profiting on Forex for real.
- Try to follow a simple money management system — trading with a fixed percentage of your account equity is both easy and effective. For example, Martingale system is not simple and leads to losses. So, a simplistic approach to money management is almost always good.
- Fundamental analysis is a nice tool, but it is better to avoid reacting to all economic news you hear. Keep it simple — select only really important releases or indicators and monitor them when you trade.
- One of the best ways to simplify your Forex trading is to hold the open positions for a fixed period of time. This way, your positions are limited not only with stop-loss and take-profit levels, but also with a time limit. I prefer limiting them to 30, 60, 360 minutes, and 1 week periods, depending on the particular strategy.
- Try not to trade the currency pairs with base currency different from your account currency. For example, if you trade USD/JPY, while your account is in EUR, your profit or loss cannot be accurately measured beforehand, because it depends on the EUR/JPY rate.
- Look for a Forex broker with fixed spreads, because trading with variable spreads can be quite confusing. You cannot rely on your strategy, especially if it is a short-term one, if you do not know the precise spread values when you trade.
Some traders adore simple approaches to the market while others hate everything that is easily understood by high-school graduate and prefer complexity. If you think that you belong to the first group, then this list will help you to organize your trading better. Good luck and do not get caught in a chase to capture the ultimate pip!