Updated from its original posting on 2012-05-18
If you want to become a big baller in the unforgiving world of forex trading, you’re gonna need more than one or two trading tricks up your sleeve. Not only do you have to know your strategies like the back of your hand, but you also have to be willing to try other approaches when the market environment changes.
In order to sustain your edge, you must always be ready to adapt and this requires diversifying your skills. Don’t worry, you don’t have to drift too far from the skills that you already have. Sometimes all you need are a few tweaks in your habits to find new opportunities.
Here are three tips to get you started:
1. Look at other time frames
Just because the School of Pipsology’s personality quizzes tell you that you’re a day trader doesn’t mean that you have to stick to the shorter time frames all the time. Some hard core day traders I know find trades by checking out longer time frames for overall direction. Meanwhile, swing and position traders usually learn about significant levels and adding positions from day trading techniques.
2. Try trading other pairs
Think you’ve mastered the behavior of a currency? Why not step it up by trading it against other currencies? For example, if you’re the AUD/USD expert among your peers, you can try looking at AUD/JPY, EUR/AUD, or even other comdoll pairs for trade setups. This way you’re maximizing your ability to predict the Aussie’s price action, but your trade ideas aren’t limited to a couple of currency pairs.
3. Be open to other trade setups
Expanding your trading skills ultimately boils down to you being open to new strategies. Again, you don’t have to veer far from the skills that you already have.
If you’re a system trader and you can spot confluences even in your sleep, then it wouldn’t hurt to try out other systems that have similar concepts. Discretionary traders can also make room for new ideas and trading opportunities by looking at other leading or lagging indicators or adjusting the parameters.
If you’re used to trading ranges and you know when they’re about to break out, then maybe you could give breakout trading a shot. You can also play around with other skills like good position sizing, trading fakeouts, and even trading a particular indicator.
The point of the exercise is for you to acquire new weapons in your trading arsenal. Having an edge in trading is always a good thing, but you need to develop fresh sources of edge to sustain your advantage.