Trading Strategy Specialization?

Should you specialize in a certain forex trading strategy or methodology?  All sorts of potential trading strategies and methodologies that you can specialize in.  There is fundamental analysis, technical analysis, quantitative analysis, programming forex robots.  There is also order flow analysis.

Sub Specialties

And within each field there can be sub specialties.  For example within fundamental analysis there can be people studying interest rates, inflation, economic growth, commodity prices, etc.  Within technical analysis there can be traders choosing to study and specialize in chart pattern analysis, price action analysis, japanese candlesticks, technical indicators, fibonacci, etc.  The quants can be looking for some statistical arbitrage opportunities, quantitative momentum, high frequency trading, etc.  The forex robot programmers are out there on metatrader tweaking their settings, coding, backtesting etc.  Even the forex robot programmers can have even more sub specialties.  There are people out there coding forex robots to trade the news.

The order flow trader can choose various paths depending on what market information they have available to them.  The specializations can include, stop hunting, sentiment analysis, expectations analysis, liquidity analysis, market sensitivity, scenario analysis, global macro, etc.  Or you can choose to do them all, which is what I do.

Beginning Traders Attempting To Find Their Way

There are traders right now who are beginning forex and are wondering what the best path for them to take is to achieve success.  They are reading forums, books, etc and trying to sift through a large amount of information to determine whether they should go on the technical analysis path, the price action path, or perhaps the order flow journey.

They are trying to find their way through the labyrinth of trading information.  It can be information overload for a lot of people.  It was for me in the beginning.  You hear all this talk about fundamental vs technical analysis, quants taking over the world, forex robots, and you struggle to know where to begin.

Yet other traders have specialized in system hopping.  They are really good at going on forums and trying out five different systems every day.  The systems can be expert advisors, or a combination of different technical indicators and their myriad of different settings.  On that, a lot of traders look to specialize and be disciplined in.  That they will do every day.

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Trading Journey

I know, for I was in that process for about a year or two before I discovered order flow trading.  I was disciplined to test out hundreds of different systems.  Never mind that I never tested out many of them long enough to determine their viability.  I was always looking for the edge in every single trade that I placed.  That journey took me to order flow trading.

Then I started hunting for what truly moved the market.  As I learned more and more, I discovered that there was a ton of nonsense I had to go through.

There have been entire books, websites, articles, videos, etc created about techniques and strategies which do not move the markets.  Some of them are lucky if they even generate 3 pips worth of identifiable, aggressive order flow.  I know, because I bought many of them in the beginning, and still have them for trading historical sake in my “avoid reading” pile of books.

One of my last junk books I bought before I started order flow trading cost over $60.  I bought it with the intention of learning some fresh new techniques and strategies for trading.  After the first few chapters it became clear that It was not what I was looking for.  It was written by a fairly well known trading author, who shall remain nameless.  And I thought to myself, what a junk book I just spent my money on.  It was just regurgitating and rehashing most of the tired old ways of trading.  I told myself that was not what I wanted.  That was not what I was looking for.  To be fair, the whole book wasn’t completely worthless.  I did discover 3-4 decent trading ideas.  There was some decent money management and trader psychology in the book as well.  But I had to go through 200 page of junk to find the few nuggets of value. 200 pages of junk strategies which did not move the market.

I was wondering why can’t someone write a book, website, etc with each page being enlightening and filled with actual really good information about what can move the market, and make people money.  I guess that thought lingered for a few years, eventually culminating in the creation of this website.

And that was my last junk book I bought before I bought Trading and Exchanges:  Market Microstructure for Practitioners.  Now that was a far better book, although it did take some time to apply the material.

Specialize In Order Flow Trading

Now I spend my time specializing in order flow.  In determining what will really make the market move.  In determining what information is important, and what isn’t.  In determining when the market is sensitive to different information.  In playing out different scenarios which can occur.  In determining the market sentiment and market positioning.  In determining what the market expectations are and what can cause those expectations to change and be shattered.  In preparing for upcoming news releases to determine whether I should hold through the event risk, or to exit the position before the news comes out.  In determining when a big global macro move can be occurring.  In determining where the stops and option barriers are.

That is where I spend most of my time on.  That is what I specialize in.