Unconventional Ways to Trade Currency

People with unique talents have very unconventional ways of succeeding. A good example is the movie, "Rain Main," when the idiot-savant named Raymond Babbitt, (played by Dustin Hoffman), helped his worldly brother succeed by counting cards. There are also many unconventional ways to trade currency that may succeed once or twice, but aren't the best systems for long-term success.

Statistical experts might trade foreign currency based on historical trends from the Farmer's Almanac, Mayan Calendar or Bible. Others prefer sports, entertainment or political trends. Some might use a dart board for deciding which currency pair to trade for the day.

Foreign currency trading involves many complex calculations for a single currency price, the trading pair, the price change and price acceleration. Calculating these numbers is very complicated, so many Forex traders use charts, software tools and analysis programs to help them. Some indicators have very unconventional names, like the "Stochastic Oscillator," that might seem to guarantee success because they are so unique.

"Currency Trading is Not a Game"

There are many unconventional ways to trade currency, but none of them will succeed if the professional does not remember these four basic rules: 1.) Don't be emotional, 2.) Maintain self-discipline, 3.) Limit your losses, and 4.) Trust yourself.

Some novice traders want "to gamble" when they feel lucky about a certain outcome, date or currency pair. Unfortunately, gambling is an emotional pursuit that has no place in serious currency trades. Currency trading is not a game; real money is at stake.

"The Mind is the Most Powerful Program"

The mistake that some professional traders make with statistical charts, indicators and software systems is that they forget that their mind is the most important decision-making program. The mind is responsible for making the final decision. Charts are merely tools that can assist the decision-making process with objective facts and statistics. No statistical tool, chart or system can replace the human mind.

Another unconventional way to trade currency is to "Be the Counter Balance." Remember, that many trading environments are dominated by multinational corporations, banks and governments that have large resources at their disposal. Over time, you might be able to notice trends - end of the month, pivot points and press release reactions - so you can anticipate how the market will react.

Most people are bandwagon fans who join trends too late, so they end up buying at the high and selling at the low. The successful currency trader is contrary to the average trader because he enters and exits before the bandwagon becomes popular. While the bandwagon trades with emotion, the professional trader controls his emotion, using his self-discipline to maximize his profit potential.

"Knowledge is Power"

Independent currency traders develop there own information networks. They trust in reliable government, financial and Internet news sources, so they remain one step ahead of the competition. They concentrate on a finite number of important statistics, like "World Price Data."

In the end, the primary successful method for currency trading is the same: use your mind to spot trends and identify market signals in order to anticipate future price movements. Professional traders "Keep it Simple" - by defining a goal, price target and risk/reward ratio - in order to determine the proper timing for buying and selling.

Currency trading is not for the faint of heart. It provides the potential for making money in a short amount of time without spending years waiting for the security to mature. Forex currency trading requires self-discipline, confidence, and determination.

About the Author:

Adam Kritzer is the author of this article on Forex. Find more information about FXCM here.