Trade Better Outside Your Comfort Zone

Focus: FOREX

The staff of Netpicks.com explains how, just like investors playing long-only markets, traders would do well to diversify their strategies.

Sometimes in talking to traders you hear things such as “I trade the Dow” or “I trade the Nasdaq.” These traders focus their attention on one market. As well, they will usually call themselves either a scalper or daytrader. There is nothing wrong with keeping laser focus on a particular style or market...but I fear some are missing out on some solid opportunities.

I started my trading career in the currency markets—retail Forex to be exact. It had a low barrier to entry, and there was a ton of “trading education” surrounding it.

Daytrading these markets can be a test of patience at times. Toss in spread costs and news releases that add crazy whipsaw at times, and it can also be a hazard. There was an article published last year that stated at one of the biggest brokers, 77% of traders lose money each quarter. How about this stat where Gain Capital stated they make average $2,900 from each active trader and the average account was $3,000!

There is no rags to riches story I can share with you. I didn’t blow out accounts only to find the grail. With modest goals and understanding the pitfalls, I stayed away from that 77% group.

Still though, I was not fussy on paying what I was to get into a daytrade, considering futures was a lot cheaper. I started to pay more attention to high risk-reward swing trading setups because it was more cost-effective.