Trading with Your Taste

Category: Articles

On investopedia.com, just found good article how become trader with our style,

“Do you like to fish, or do you prefer downhill skiing? How you answer that question may have a greater impact on your trading success than the most robust trading strategy you can devise. The FX market offers multiple avenues to trading success, but in order to take advantage of these opportunities, you must first understand your strengths and weaknesses. Most traders are taught that there is only one “proper way to trade”. Nothing could be further from the truth. As an adult, you are highly unlikely to change your ways; markets, on the other hand, change all the time. Therefore, it is far easier to find a trading technique that is in sync with your personality than to try to conform to someone else’s idea of a “proper trader”.“

And some example:

Fundamentals for Long, Technicals for Short
Despite these admonitions, the general rule of thumb is that fundamentals tend to have a stronger impact on longer-term trades, while technicals will be more important to consider for shorter-term trades. Over the long term, currency prices will respond to major economic events such as GDP growth, interest rates and current account balances.

Witness, for example, the move in the GBP/USD over 2005 (Fig. 1). During that time, the Federal Reserve Bank of New York proceeded to raise the Fed funds rate by 200 basis points, from 2.25% to 4.25%, while the Bank of England, facing a slowing economy and depressed consumer sentiment, chose to lower the U.K. rates from 4.75% to 4.5%. The interest differential between the two currencies compressed to nearly 0% (by the beginning of 2006, it had reached 0%). Traders who made a long-term bet that U.K. and U.S. short-term rates would converge profited handsomely as GBP/USD declined.

for full article, click here