The Successful Trader's Guide to Money Management

APPENDIX III

III.1 The Advantages of Forex

Today the online trading market is literally teeming with all kinds of ads promoting Forex trading.

Unfortunately, most of these ads give people the idea that there's some sort of ‘wonderland’ where you can get rich quick, often after simply reading a few explanatory notes on how the market in question works. In many years of trading, one thing I've learned is that nothing comes easy in trading, and if people approach this profession with the idea of getting rich their results will often be a letdown, if not totally disastrous.

Often in this book I've emphasised the importance of limiting losses and conserving capital, and profits will be an almost natural consequence of a job well done.

But I don't want to demonize Forex because, if used with due caution, it can also offer some considerable advantages.

Strictly in terms of trading, it's undeniable that the variety of the offer on the Forex market means notable diversification, not only in terms of instruments but also in terms of actual approaches. Various currency pairs are well‐suited to trend trading, while others tend to revert to the mean value, which makes opening countertrend positions preferable. It's important to note that while trend positions could in theory have an infinite duration (once a trend has started it could, at least in theory, last forever), it doesn't make sense to consider countertrend positions the same way, because if a position opened in countertrend was ...