Easiest Forex Strategy
Possibly one of the easiest Forex strategies in terms of its implementation, but not necessarily one for beginners is news trading. News trading simplifies the market, as it specifies a time, namely the time at which the economic data which may move a Forex pair is released. Thus the trader only needs to speculate on the way the market will react and take a position close to the release time and then exit after the move.
However this kind of trade in facts shows how complex the Forex markets actually is. Firstly, the trader needs to speculate on the way the market will react. They can look at an Economic Calendar and see projections for what the economic data might be. However to move the market the data in general (but not always) needs to be deviated from the expected result. Thus if the trader wants to trade on a potentially directional move, they need to have a reason for speculating that the projections are wrong, which by definition is to trade against expectations. The trader can simply trade against the expectations, and fade a move, not because there is reason to believe that the projections are wrong. However if the trader has reason to believe that the expectations are wrong then they can trade based on their own belief (with the caveat that it may be wrong).
Next the trader has to pick a time to make the trade. Trading into the news, that is at the time of release is problematic as the market can oscillate wildly and spreads can widen, making it hard for the trader to make any gains even if they are right. Taking a position too early can result in the trade being taken out by wild moves before release. The trader has to hope that that have taken a position in a quiet time just before release and the market will not move in a volatile manner, but it probably will. Then the actual reaction, even if it moves in the way the trader wanted, can oscillate resulting in a move against the traded position very quickly. Thus the trader needs to exit and be able to exit in a potentially fast moving market. Then if the market does not oscillate it may pause at a certain point. Then the trader may wish to consider exiting, but of course it may then continue (or reverse) or move in a more horizontal manner.
Thus while there may be apparently simple or easy strategies the trader can find that the execution of the strategies is very hard, mirroring the complexity of the Forex market. The trader will also find this to be the case in slower more normal markets if they for example trade using a moving average. They may find that the market does not continue in the directions the average may suggest, again reflecting the complex ways the Forex market can move.
