Yes, you will trade day by day, hour by hour and minute by minute in the Forex market. So, your Forex strategy is the short term fluctuation that will make you money, not the long term trend. Right? Maybe. Inflation is likely to set in as economies confront the huge amounts of debt they have taken on to provide stimulus to prevent a recession from getting worse. How does the expectation of steady inflation in one economy affect your Forex strategy of a given currency pair?
An accomplished poker player knows and plays all of the odds. Over a long night or a long weekend the player who knows and plays the odds wins more, on the average, over time. There is nothing spectacular in this just like many aspects of ones Forex strategy may not be spectacular but when trading in the Forex market over time, for the long haul every little bit helps.
This part of one Forex Strategy has to do with that little bit extra every so often that mounts up over time. It also has to do with staying contained and staying on plan with your Forex Strategy. By staying contained I mean not trading up to your limit, every trade, all the time in the Forex market but doing repeated small trades.
If you know that the dollar is in a long term slide against the pound or the yen or, more to the point, it is in a month long free fall then you can modify your Forex strategy accordingly. If you are trading in light volume and are trading in the direction of the dollar’s free fall (in this example) you might get stuck when the market shifts. Let’s say you sold dollars and bought pound sterling expecting to buy back cheap dollars at the end of the day. The market rebounds and if your Forex strategy is to trade in large amounts then you had better get out of the trade fast and accept your losses. However, if you are trading in a lower amount, a smaller fraction of your reserves, you can wait for the market to turn around.
If, indeed the market is trending, over time in a given direction then trading with that direction in mind will give you that little advantage that mounts up with days, weeks, and months of Forex market trading.
Obviously you will follow the advice of your Forex trading software. However, when the software recommends a trade that does not work out then let it be that you will profit when the market resumes its medium and longer term direction.
Long term success in the Forex market as in other parts of life is the details. Finding each mini Forex strategy that makes sense and adding it to your tool kit will give you that little advantage every day and that advantage will lead to a little bit more daily success which in turn will lead to excellent long term results. Knowing your currency pairs, knowing long term trends, and factoring in the long and medium term trends into your short term Forex strategy will enhance your Forex market success.