Investors often make use of a simple strategy that is known as entering the markets. With this strategy, traders make money by just any random entry trades into the markets. The concept with a random entry is that traders give up on the advantage that your trade has. The way to make money with a random entry is by catching a strong trend whilst making sure that your losses are not too big. Using this method, due practice must be made when it comes to position sizing.
Before making use of this strategy, it is strongly advised that traders must test this out. Forex back testing involves trading on past historical data. In our little experiment, we decided to make random entries in the commodities markets over a ten year period of time. With proper position sizing and random entries, we managed to always end up in the profits consistently, of course for a few instances of drawdowns.
So when such a strategy has been proven to make money, it is strange that traders make a lot of fuss about it. One big factor that influences such thinking is that most of us, traders are not are usually brainwashed into thinking that the only way to profit from the stocks or currency markets is in choosing the right stock or the right currency pair to trade, at a right time as well. Truth is far from it.
People have made money from the markets not just by picking the winning stocks but following other unconventional strategies as well. For example, picking a stock that has a high earnings per share growth over a period of time works quite good. Of course the trick is when to get in and when to sell the stock. Or to illustrate this further, you could buy a 25% trailing stock where in the initial risk would be about $200 with a 25% drop. Now assuming that the stock price grew to $20 then it would be sold at $15 (25% trailing stock). Using this method, one could easily make a profit of $700.
Going back to the context, success in the financial markets is not about choosing the right stock or currencies to trade with. There are no right stocks. Consider another example. From the original set of companies that made up the Dow Jones Industrial , General Electric is the only company that is still alive to this day.
To conclude, making use of unconventional trading strategies can help you identify a potential gold mine instead of going with the flow and what is usually drilled into our heads. Experimenting with trades is one good way to test out new waters when it comes to financial markets investing.