Trading in 2017: Why Strategy is Crucial During An Uncertain Time

When it comes to trading and making sure that your investment comes back to you, there are several routes to success.

Michael Burry

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Solow en el Parnaso (@SolowEnParnaso) 11 March

2017

When it comes to trading and making sure that your investment comes back to you in the form of a return rather than a loss, there are several routes to success, many of which can be a little confusing.

Movie fans will be well aware that even a genius like Michael Burry (of The Big Short fame) can be confounded by investment markets and why they don’t always behave as expected.

Hedge fund manager Burry suffered an investor revolt when he decided to short the housing market, but those who stuck around and trusted Burry saw a return on their investments of 489.34 percent, proving the amount of subjectivity that exists when it comes to investments and trading.

Hollywood plot lines aside, what Burry’s case does prove is that having an understanding of what you hope to achieve is key when it comes to plowing money into something. So, whether you’re looking for that one big payoff or want to look into trading as often as possible to maximize small gains, sticking within the parameters you set yourself is key.

Believing in your strategy when nobody else does and keeping consistent is also a crucial lesson to take into whatever investment opportunity you choose.

What Strategy To Pick: Forex To The Fore?

One market worth considering for your trading strategy is the Forex market. Companies such as forexbonus.com.au make it quick and straightforward to open and manage a real account for trading in the Forex market. They also offer a demo account that can help you to establish a trading strategy without risking any hard-earned cash as you get used to the ins and outs of Forex trading.

Demo accounts will allow you to learn potential mistakes, including the risks of entering trades when you shouldn’t, taking profit when you shouldn’t, and identifying false signals.

Affordability is also a crucial element to learn about: the Forex market is, of course, one in which you can lose money as well as gain it, so being able to cope with losses as part of a wider financial strategy is key.

Brexit Shows the Importance of Having a Strategy

Brexit provides an excellent case in point when it comes to having a strategy and sticking to it. The uncertainty brought about by the Brexit vote caused huge ripples through the Forex markets, with some of those shockwaves causing traders with both short-term and long-term strategies to rethink.

The importance of avoiding panic trading, however, seems to have been emphasized once more in the Brexit example. Take the GBP/JPY market as an example. It has been particularly volatile over the past six months, with both countries seeing their currencies undergoing shocks.

The fact that the British Pound has gone from being worth 165 Japanese Yen at the start of last year to around 138 now means that those looking for short-term trades will have likely seen a loss if they were gambling on Brexit not taking place and betting on sterling. Contrary to this, those with longer term strategies will be looking to ride out the uncertainty and waiting for a return to strength of the pound.

No single trading style is infallible and without risk, but those who trade without a strategy are far more prone to panic and to reacting to events like Brexit without stopping to take a breath.