Don’t try strategies above your level
Say that you happen to be one of the Forex Traders that’s invested but also cautious. Then there is a chance that you might immediately start researching advanced relatively safe/reliable techniques for Trading as you want to be conservative with your money and only enter trades when you’re sure. Which, you know, is the correct way to handle your forex funds, but therein lies a problem: You really have no idea what you’re doing.
Context is everything. For example, as an advisor of forex trading, what if I said… ‘blargen-fezibble-nukhip’? Sounds like gibberish, yes? That’s because it is, but it’s actually a reference to a line in a tv show. There is almost no way that you’d figure that out yourself, and you’d either ignore it, or start using it in your speech without knowing what it is, thinking that it might be a code or something. The same thing goes for advanced forex strategies. Some of them can get really complicated and use terminologies or indicators that sound like gibberish to you. But if you studied forex in the proper sequence up till that point, you’d understand them. However, there are people who do go into these things, look up the short definition of any term they’re completely clueless on and move ahead with using the strategy. Thinking that they have it all figured out.
In the end, skipping to advanced forex strategies while ignoring the intermediate isn’t as helpful as you think. This isn’t the classic textbook case of reading ahead into an entirely different topic that only slightly relates to what you’re already doing in a complex question later. Forex is heavily interconnected and certain concepts will show up and either interfere with one another or work with them in synergy. Just because you know a few topics like how to work lot sizes or how the leverage system works doesn’t mean that you’re ready to go stop hunting or pivot trading or using Bollinger Bands. The knowledge that you’re gaining isn’t meant to impress anybody on recital, it’s meant to work for you. And it’s going to have a hard time doing that when you’re missing key components. That’s why Forex lessons are spaced out in the way they are. Each level built upon the foundations of the previous one.
This approach usually results in people having complicated strategies that they really have no clue as to how they work. The best they can do is read off an example that’s given and then try to transpose the process outlined into another market situation that’s similar enough to apply to. This can then go two ways. Those who only stick to the specific market situation that they saw for the strategy will probably miss a lot of opportunities to use the strategy in different situations. If that strategy is the crux of their trading, then they will likely barely ever trade as they wait for things to set up perfectly. And in the end, even if it does feasibly go along those lines, there’s another factor that could ruin the entire plan but I’ll get back to that.
The other type of trader in this situation, the more reckless type, tries to apply that strategy to almost everything that even remotely resembles the examples they were given. It doesn’t matter if the market moved much more or much less than the example situation had if the swing Arc of the market is similar they’ll go for it. Technically this could work as there are some strategies that apply in situations where if one specific element is similar then there is viability for its use. But it’s not that simple as there’s no guarantee you’ll guess right with the right element. It’s still reckless trading it’s probably going to incur more losses than expected and then have them deem the strategy as useless. But there’s still that other factor that I alluded to previously that I’ll go into now.
Market swings don’t exist in isolation. There could be a lot more going on that’s somebody who skipped ahead with just have no idea about. Maybe the strategy they chose actually could have worked in a normal circumstance but the market they chose is highly volatile and so it swings back to hit their stop loss before anything else can go in a feasible pattern. Maybe the market is currently in an overbought or oversold situation and is thus resisting certain movements in an attempt to regain balance. Maybe certain recent events in the major country affiliated with the currency being traded affected the market in ways that you never predicted or perhaps you never even got to the point where you had an idea that events could swing the market so wildly. Perhaps you’d even think that you’d have to enter the market immediately when trading, not knowing about the difference of market execution and stop/limit orders.
Bottom line, if your trading, don’t skip out on learning concepts by thinking that you’ll just learn them eventually or naturally while you trade. If you’re lucky enough to have a guide or a trading courses academy, then don’t skip lessons. Again, context is everything.