All currency trading strategies which have high tolerance of trading mistakes, and offer flexibility, are considered to be robust. There is always market risk involved, but the trader is not forced to make quick, impulse decisions. So by this definition one can develop safe currency trading strategies. Based on any low frequency strategy, one that tolerates volatility. Most traders who lose money trading forex, do so because they tend to trade at very high frequency, and to chase volatility too much. They also tend to have a strong belief in the idea that market price is always right — which is not true. Safe currency trading strategies cannot be very profitable, exactly because a huge portion of price fluctuation is missed, but that is precisely the concept. By avoiding much of the volatility, a lot of opportunities are missed, but a much greater portion of risk is also avoided. Slow traders take things lightly, and wait for a few good opportunities, so as to trade only through those well-selected opportunities. This naturally implies that they could always trade at much larger size, than they otherwise would. And this is perfectly safe, as long as the strategy is safe enough. And as always, extra security is provided by evaluating open losing trades in their early stage. This evaluation allows for losing trades to be closed early. It allows for other, less clear trades, to be hedged with an opposite trade, hence locking the open loss. And with other even more complicated trades, it allows the trader to assess each one of these trades over a period of days, not minutes or hours. Therefore the pressure to make fast and bad decisions is removed.
What Makes Safe Currency Trading Strategies even Safer
Safe currency trading strategies can be made safer still. Simply by looking at the causes of false signals in the market. The effective way to do this, is to focus on the daily chart of the currency pair in question, and to do classic analysis. Simple swing point analysis and few chart patterns, when used in detail, can make up a complete powerful technical analysis method. A method for evaluating various signals, market moves, and of course open losing trades. These are all evaluation methods that the day trader doesn’t have. But the safe, longer term forex trader does have. Investing in foreign currency is part of safe, low volatility forex trading. Because the trader maintains an investor’s mindset, rather than a trader’s. The only difference is that they still trade with leverage, and use contingent orders. But as long as the flexibility is large enough, the trading strategy will work just like stress-free investing. The hidden power of the daily chart and its analytical insights are amazing. This is because the period of the markets is the day itself. Safe traders take chart analysis seriously, but they take their own trading lightly. There is nothing wrong trading various currency pairs, and doing appropriate analysis on each one, analysis that goes beyond the generic methods. This approach is appropriate as each currency pair is actually different, compared to other correlated pairs. Intermarket analysis is often good, but is not the holy grail. As it is possible for a minority of markets to lead the new trend, and for the majority of other correlated markets to be lagging behind. Many foreign exchange currency symbols look a lot alike, as often do their charts, as they are crosses of the same underlying currency. And generic analysis methods fail miserably from time to time, exactly because they fail to deal with the unique aspects of each currency pair that these symbols represent.
