There has been a trend I recent years for more and more traders thinking they can buy success from a vendor, or a forex robot - but this method ends in tears and the market teaches them a lesson. If you want to win, you need your own forex strategy that contains the enclosed...
First let's quash the myth you can buy success, most of the systems sold by vendors, come with simulated, back tested track records and that's no help going forward!
Now to encourage you that you can win, here is a simple fact which most traders never really think about.
95% of traders lost 50 years ago and 95% lose today. It's the same ratio despite all the advances in forecasting software and powerful PC's we have seen in the intervening period.
What is so significant about the above fact?
Simple forex trading systems work best and to win, you don't need to do anything complicated.
Your forex trading strategy should contain the following:
The Logic
The logic should be based on long term trend following and trading breakouts - to new highs and lows on charts. This is where most major moves start from, so if know how to trade breakouts you can get in on these trends.
The Indicators
Most traders think the more indicators they combine the better - but this is doomed to failure.
Use too many and your system will have too many elements to break and will not be robust.
In my opinion you should start with trend lines and an understanding of support and resistance.
You then need to use a few momentum indicators to time your trades.
Always, make sure when you buy or sell, your trading signal is supported by momentum. One or two, is all you need and the stochastic and the RSI, are a great place to start
Money Management
You need to pay careful attention to this and don't make the mistake most traders make which is to use all the leverage their given! You can get 200:1 but you don't need to use more than 10 - 20 in my view.
Furthermore, if you are trend following allow the market room to breathe and don't get your stop to close. If you do you will be bumped out of the trade and then see your trend sail on over the horizon making thousands of dollars and you're not in!
There is a balance, you have to have your stop far enough back so that random volatility doesn't take you out and close enough to protect yourself.
To win long term you must run the big trends and you must balance this risk to reward.
Discipline
The real advantage of building your own forex trading strategy is - you will understand it, have confidence in it and this will enable you to trade with discipline, through losing periods until you hit a home run.
If you can't trade your system with discipline, you don't have a system!
Most traders lack discipline and cannot execute their trading system through losing periods and throw the towel in to soon.
The above is a simple framework for getting a forex trading strategy together, you can seek big gains with. The route to currency trading success is:
A simple forex trading system, which you can trade with discipline and it really is no more complicated than that.
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