'1234' Strategy in Forex Trading
Forex traders always need to exchange Forex trading opinions and strategy. Recently, there is a so called '1234' strategy in Forex trading. '1' refers to one concept. Realizing the Forex trading is seeking the greater return through smaller risk. Specifically saying, the Forex market is a fair and also a giant market, there is no Forex trader who is able to control this market, therefore any Forex trader which undergo Forex trading does not ensure profit making. Since no Forex trader is certain about profit making why do they still do transaction? This is because the Forex trader thought the probability of making profit is bigger than probability of making loss. For example, after Forex trader analyzes the present trend and bought pound, the probability which the pound loses money is 50 pips, but gains probability is 150 pips, then this definitely is an opportunity which is worth investing. But 50 pips losses probabilities are in fact if the Forex trader really execute stop lost. Therefore this '1' concept is closely related to stop lost. Truly understanding this point, while doing transaction Forex traders can rely on own initiative observing the rule and the discipline, so that uncontrollable loss will not happen.'2' refers to two points which are stops loss point and take profit point. The majority Forex trader does not make money in the Forex market, this is because they are not using these 2 points efficiently and effectively. Most Forex traders frequently encounter the similar experience: Buys up one kind of currency hoping the currency to rise, later on the anticipation is not correct and do not want to stop loss, the loss later become larger and larger and still keep on waiting. After the long waiting, the currency starts gradually to rise strongly, but when the currency approaching the original opening price position, most Forex traders hurriedly left the market, finally a trend has rise even stronger, but the Forex traders have miss opportunity. This kind of phenomenon repeatedly occurs among Forex traders, mainly is because the Forex traders have not following these two points. If Forex traders on certain position able to promptly stop loss, it will avoid from a long period of waiting. Such situation is very normal and also happened frequently. Any Forex traders should put stop loss as a price to pay, a price that could win a high profit, there is no free lunch in this world, understanding this will make you not feeling bad about your loss.'3' is about margin allocation of adopting 1/3 proportional distribution law. Specifically, the combined orders executed are allowed to use up to 1/3 of the margin, but it cannot be used up in one shot. Because the market contains uncertainty, after if you buy up and the trend is different from anticipation, the entire transaction will cause you to fall into the passive condition. But as for the 1/3 way of Forex trading, after buying a position, the market reverse movement, promptly stop loss can help to reduce your lost, but if the market is consistent with the anticipated direction, Forex traders can use the unrealized profit to supplement the margin, causes the profit space unceasingly to enlarge. '4' is four aspects to consider in choosing the right time to execute an order. First, fundamental analysis, many technical analysts prefer not use the consideration basic surface factor. But average Forex traders' experience have not reach such level, most Forex traders must use fundamental analysis to anticipate the best time to enter the market. Second is the technical analysis consideration, the technical specification is various, different Forex traders may choose their own preferred Forex charts and views to execute orders. Third, is to analyze the market through the currency movement trend. For example, if US dollar after experiencing a period fall, and after US announces a worse data but US dollar no longer to fall again, indicated US dollar dead end strength already melted, the date for US dollar to rise supposed to be not too far away. Fourth, conducts the analysis research through correlation market. If the short-term international crude oil market unceasingly will innovate high, might analyze from this phenomenon to US dollar, Japanese Yen disadvantage, but to euro, pound, Canadian dollar advantageous, to auspicious court attendant's influence neutrality.
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