Each Forex trader has their own strategy. Some uses Forex strategies that are well-established, some build their own from scratch and others use a combination.
Developing your own approach is important. You have to be comfortable with your strategy, and it needs to deliver results. This seems to be daunting prospect for beginners, so here are some basic rules to get you started.
10 Helpful Tips To Build Your Own Trading Strategy
Filter your inputs
Not all Forex advice is good. Where the advice has come from should be figured out, and how much you trust the source. It’s important while using internet. Number of amateurs is confident of what they’re doing, but they don’t.
Test and modify
On developing your trading strategy, set of recommendations will be started from analysts and other traders. Try these and modify on your demo accounts to see what happens. It’s important to create your own formula for success, as this will enhance your trading skills.
Don’t reinvent the wheel
You can learn from Forex analysts and experienced traders. They are in the market because they are successful. Study their strategies and learn from them. Don’t follow them blindly, rather test out what they are saying and see if it works.
Look at long-term trends
Some traders make money from short-term market fluctuations, but if you want to understand where the market is going, look at longer time frames. Short-term data contains a lot of noise and can’t be trusted for overall predictions of market.
Don’t stick to one time frame
Analyze the market with the help of different time frames. Opportunities may emerge while looking at daily data, and not show up while analyzing hourly intervals. Conversely, you can profit from short-term anomalies even if the long-term trend differs.
Include fundamental analysis
Technical analysis shows the likely market direction based upon factors of internal Forex market, such as the number of buyers and sellers in the market. However, overall direction of the Forex market is influenced heavily by the real world. Study economic events, such as growth figures and interest rate changes, and decide Forex market.
Extensive fundamental are carried out by Forex experts in market analysis and produce daily reports and recommendations. You can use these when formulating your strategy, but keep in mind that these are not rules only recommendations.
Also Read: How to Become a Successful Forex Trader?
Market can be watched 24 hours a day, so set stops on your open positions. These are orders to sell when the ask price of currency reaches specific value. These can be used to lock in your profits and limit your losses.
Even if you are online, you should still set stops. Decide on these before you open a position. It’s often tempting to keep a position open once you hit your original limits, and setting a stop will make you think twice.
Look for volatility
Certain currency pairs are volatile enough; the price can suddenly jump up or down. When you’re trading a volatile currency pair two things should be done:
- Trade in small amounts to limit your exposure
- Set the stops far away from the support and resistance lines
Be careful entering just before the market closes
The American market can be very volatile at end of Friday trading. There’s a lot of news at this time, and many traders are closing their positions. The same applies at the end of the month.
You may choose to ignore some of rules above and add others when you gain more experience. However, we would recommend following this list when you’re starting out, as doing this will help you avoid some of the most common pitfalls.
You can also try Strategy Quant Professional for trading, if you are a new and want to generate a profitable trading plan then use this professionally designed trading strategy generator. This tool will help you to generate trading without need of any professional knowledge. Download it for free and multiply your money.
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