one of the most important issue In successful Forex trading is to have a Forex trading strategy. In internet, you can find lots of Forex strategies, like Fibonacci trading, break out trading and etc… But you can’t get money in Forex market with these strategies. Because they are not appropriate for you. To have the best Forex trading strategy , we have to consider our psychology, our goals, our plan and our dream. Let’s start knowing about Forex trading strategy.
Know yourself in Forex market
first step is knowing yourself in Forex market. But how to know ourselves in Forex market? If you discuss with a financial consultant , the first question that he tells you is what’s your goal in Forex market? So, please tell me, “what’s your goal in Forex market?”
To design your greatest Forex trading strategy without any vicissitude, it’s vital to specify your target in Forex market. What’s your goal in Forex market? How much money do you want to get in Forex market? When you specify your goal In Forex market, you can make a decision about how to trade. Even, you can choose another market and asset class to trade, not only you can opt Forex market, but also you can choose stock trading, indices trading, Gold trading, bitcoin trading and other CFD and future trading.
Please specify your goal, then we can design a forex trading strategy related your goal. for example, You want to get 10% of your balance in forex market monthly. is it right goals for you? It’s better to set your return annually , otherwise you will involve in short term fluctuation. Another matter is knowing your psychology, patient and passionate. For example, I can’t trade daily and use day trading strategy. Because it makes me mad, I want to trade with reasons, long terms, without any stress.
I want to trade in long term. But you have to know your psychology, and find a way to enjoy trading. Not like amateur traders invest and trade without any reason, just following emotions, excitements, fears and greed.
There is no fixed rules and strategy
After setting your goals in Forex market, the next step is understanding that there is no fixed rules and strategies in Forex market. Everything is variable, everything is moving, there is no miracle way or strategy which can help you to become a millionaire. Forex market is a market with more than 5 trillion$ daily volume. We have to behave like a professional In this market, and Improve our skill and strategy for Forex trading.
You can trade in Forex market whenever and wherever, the most crucial matter is to choose: when do you want to trade? In technical analysis, you can analyze 1 minute chart, 5 minutes, 30 minutes, 1,4,8,12, hours , daily, weekly and monthly chart. Which one is proper for you?
It depends on your goal, if you want to get income daily, you should use hourly and minutely charts. If your target is long term, and you desire to achieve money yearly or monthly in Forex market. You can use daily, weekly or even monthly chart for your Forex trading strategy. It means that when you want to trade, you analyze just today’s fluctuations or last 6 months. Or last 2 years.
We have to choose it proper for our Forex trading strategy. I had a friend who had a lot of dreams in forex market. He wanted to be a millionaire and a successful business man among the traders. But his trading strategy was not appropriate for his dreams. Because he traded daily, hourly and even minutely. He couldn’t do this, he was really tired from trading. He couldn’t get any income with that trading strategy.
After several failures, He decided to change his way. He initiated to trade on trends, with long term vision. Like professional traders. To do this, he had to be patient. And he did. In long term, He could get outstanding income in Forex market with compound effect. There was no success over night, but was over time.
Find the best technical analysis indicator for your strategy
Forex technical analysis is full of indicators, patterns and other useful instruments to analyze Forex market. My experiences say the best way to use technical analysis is to find trends. Without trend we can’t do anything, we have to specify trends. Down trend, up trend, range.
The most useful Forex trading strategy is trend strategy. You find out an uptrend in an asset. You buy it, and it will give you lots of money. And it’s same for down trend. You find out a down trend asset. You sell it and it will be like a treasure. How to find out trends? The most common indicators to find trends is moving average.
“200 days Moving average is used by the best professional traders.”
Beside moving average, You can use Alligator indicator, Bollinger bands, Ichimoku and etc… To sum up, trend strategy is the best strategy to trade in Forex market.
Determine how to use fundamental
One of the main reasons that lots of forex trading strategies is failed, is: They don’t use fundamental analysis. Fundamental analysis is the reason of each movement in forex market. It’s preposterous that forex traders don’t pay attention to fundamental analysis. As a successful traders, you have to use fundamental analysis in your forex trading strategy.
The most important fundamental issue, like interest rate, inflation rate, unemployment rate and etc… is really useful for trading. And you have to specify: When should you use fundamental analysis?
The next vital step to have a breathtaking Forex trading strategy is to specify risk tolerance. What’s risk tolerance? It’s up to your budget and your goal. For example, if your net wealth is 2 million$, definitely you don’t want to lose all of your money. Risk tolerance is the amount of money that you can endure to loss it.
I see someone who have a great deal of capital, but they invest 1% of their money in Forex market. They want to use their money in another market. Risk tolerance is depended on your trading goals directly. If you want to get 50% of your income monthly, you should be ready to lose your money. But if you want to get money overtime, with lower volume, your risk is not high. If your risk tolerance is high, you can use higher leverage. And then, You can trade more, with higher volume. As a Forex trader, we have to know our risk tolerance in our Forex trading strategy.
How to trade?
We explained all of above lessons to trade like a professional and get money. The first thing that you do for forex trading is to choose an asset to trade. you can opt it by technical analysis, fundamental analysis and etc… Lots of traders just consider to choose among assets, and analyze markets to find the best opportunity. Beside it, there are some important question that you have to answer it about your trading strategy.
- What about volume?
If you have 1,000$ in your trading account, how many volume should you trade? 0.01 lot, 0.1 lot, or 1 lot How much money do you involve in each trade? 10%, 20%, or 100% It’s so important that you specify your trade’s volume. If you don’t know about lots, pip, and leverage , please read this article.
- Entry and exit point
To have a great Forex trading strategy, we should know entry and exit point. Please answer this question When do you enter into a position? When do you close the position?
- Stop loss and take profit
Do you use stop loss or take profit in your trades? Please specify it in your trading strategy. As a Forex trader, I advise you to use a proper stop loss or take profit in your trading strategy. because if you don’t use, you lose your money when the market move against you.
Don’t hesitate to follow your strategy
When we choose our trading strategy and design it properly depended on our goals, risk tolerance, dreams and etc… But it’s really important to write our rules, and our trading strategy, And follow it constantly. However, in Forex and other financial markets you can earn money, get rich, become a millionaire. But if we hesitate to do our rules constantly ,we involve in short term emotions and excitements and will lose our money. So, please write your Forex trading strategy, review it every day, and adhere to our trading strategy.