How to Create a Forex Trading Strategy?

-
How to Create a Forex Trading Strategy?
How to Create a Forex Trading Strategy?
The word ‘Strategy’ itself is intimidating to novice traders as there are no foolproof techniques to create a flawless strategy. You might have a tight grip over the concepts of trading, but that doesn’t come in handy when creating a strategy. So, here are the basics to help you create a strategy.
Step 1: Identify the trader in you
The first factor to consider before developing a trading strategy is the time frame in which you can trade. In Forex trading, you can trade at your convenience, but sticking to a routine will help you make an effective strategy.
Day traders are those who can spend most of their time reading charts and numbers. They make over a dozen trades in a day. Swing traders hold on to a stock for a few days, and the time they spend is only to keep themselves up to date.
Step 2: Foresee the trend
The better you know the trend, the better are your chances of profit. The trend is the way in which the market moves. Remember, you can make profits from both uptrend and downtrend.
The moving average is one of the simple ways to identify the trend. There are a number of chart analysis indicators which can help you confirm the trend.
Step 3: Workout the risk
A good trader is always calculative of his risks. Know how much you can spare for the trade and never dump everything you have in a single trade. Always be aware of what can happen when things don’t go your way.
Your strategy should reflect on how much you can afford to lose in a trade and should get you out keeping your losses low.
Step 4: Determine your entry/exit points
Your strategy should define when to enter a trade and when to exit. Some traders get out even with a marginal profit, while some tend to hold on to it longer. The charts can go either way, so know your entries & exits, and stick to your plan no matter what.
Without calculating your entry & exit, it is easy to succumb to the disposition effect.
Step 5: Write it down and stick to it
Once your well thought out strategy is ready, write it down and stick to it, at least for a considerable amount of time. Discipline plays an important role to not connect to your investments emotionally. A number of traders have lost a fortune stepping out of their strategy after giving in to emotions.
There is no strategy to win your profits in every single trade, so feel the need to change & update your strategy according to the trend.
Alfa Financials offers a full suite of the best trading platform for beginners and professional traders. View our customized trader platforms, we are the trusted and experienced regulated online forex brokers for Forex, Futures, CFD and Currency Trading.

Comments

Post a Comment

Popular posts from this blog

Beta Trading in Forex

-
Image
Beta Trading in Forex Introduction Every investment in the market will have two fundamental components - risk and return. These are measured by two statistical variables - beta and alpha. Alpha measures the risk of stock positions and the stock volatility relative to a market benchmark. In detail, beta in trading is a mathematical measure that helps the traders to define the relative risk profile of an investment. Beta was initially originated in the stock trading. In order to understand how well the beta works in  forex trading , it is essential to know how the beta coefficient helps investors to choose stocks that are moving against the overall market average. Beta coefficient The beta coefficient measures the relationship between a stock’s price and the volatility of the market. Beta coefficient β(x) = Slope of stock x / Slope of market average It can be considered that if the value of the beta coefficient is higher, the impact will be stronger. In detail, ...
Read more

Alfa Financials | A Small Guide for Proper Forex Trade Execution

-
Image
Alfa Financials | A Small Guide for Proper Forex Trade Execution  Successful implementation also goes hand-in-hand along with thorough preparation for success in Forex trading . Learning to navigate the forex markets can seem unnerving for novices; however, it's not unlikely. Here are a few steps to establish yourself in the FX market: Be in the Loop on Market News:  The importance of price action on how your trades play out cannot be dismissed. Whether you follow fundamental or technical analysis or maybe both-sudden news announcements, economic policies, reports or abrupt political developments influence your trades. Always follow market news & updates and stay well-informed before taking important trading decisions. Lower Spreads Can Be Money-Saving:  The difference between your buying price and selling price is called the spread. It is measured in pips and this difference is how your forex broker makes his money since most brokerages don't charge any ...
Read more

How to Avoid Losing Money in Forex Market

-
Image
INTRODUCTION Forex is a financial market which is used by many people all over the world in a day to day life. In other words, it is a gathering of people where buyers and sellers are involved. It allows people to make a profit regularly. Forex is not a platform to become rich in a single day. It takes more of your time and needs in-depth knowledge about trading. The below-mentioned points are necessary for any trader to survive in trading by reducing the loss. PREPARATION Assess yourself, get to know you in every aspect. Set goals and change your mindset accordingly. Be mentally prepared for any situation of the trade. Set entry and exit signals and make that signal easily visible during the trade.Knowing what to do and how to make a safe move in any market condition is a part of preparation. DEMO ACCOUNT Forex is a platform where you can get into it very easily with the help of a  forex demo account . The demo account is useful when you are a beginner; you can prac...
Read more