While there are considered to be four major forex trading strategies, people rarely utilise more than one on a regular basis.
Interestingly, there are several degrees of separation between said trading strategies, from short-term options such as scalping (which look to leverage everyday volatility in the markets) to more stable and longer-term options such as swing or position trading.
In this post, we’ll look at the pitfalls of using just a single forex trading strategy, while asking how combining multiple approaches can deliver increased profits.
What are the Main Issues When Using a Single Trading Strategy?
Of course, people tend to prioritise a single trading strategy out of familiarity and habit, while it’s also reasonable to assume that they believe their chosen approach to be superior to all other available methods.
However, there’s a danger that you may become too preoccupied with your chosen strategy, particularly as the prevailing market conditions continue to change and your tunnel vision prevents you from adapting in an appropriate way.
You may also find that relying too much on a single strategy narrows your mind and prevents you from learning more as a forex trader. Over time, for example, you’ll see that such a narrow focus limits the number of things that you think can happen in the marketplace, causing you to overlook potential issues or (in some cases) the most effective solutions.
The Benefit of Adopting Multiple Strategies and How to Make This Work
Not only can learning and adopting multiple trading strategies enable you to develop new skills and mindsets as an investor, but this can also make you more profitable over time.
The reason for this is simple; as each approach will have its own sequence of winning and losing trades, and utilising multiple methods will help you to capitalise on how the probabilities of each option are distributed over time.
In terms of making a multi-strategy approach work for you, your first step should be to adopt a patient and disciplined mindset. After all, it’s recommended that you look to master a single, preferred strategy before attempting to learn others, ideally scaling your efforts in line with increased experience and profitability.
This way, you’ll avoid overloading yourself (especially as a novice trader) and can give each strategy the full attention that it deserves.
Also, it’s worth making the most of the demo account feature on your chosen trading platform, so that you can hone your skills and experiment with different strategies in a simulated, real-time marketplace.
This way, you can learn new and relevant trading strategies without having to risk your hard-earned capital.
