Build Your Forex Trading Strategy
A Forex Trading strategy, if properly developed and followed will allow you to survive and make progress in the Forex market. Without a strategy, you will be at the mercy of the next exciting story or chasing a breakout (which can turn out to be a trap.) This article will walk you through the key components and benefits of a Forex specific trading strategy.
One of the best analogies I heard to trading was to imagine yourself as a hunter who lived at a secluded cabin in the woods. The hunter knew they would only be able to eat what they killed and that many of the animals were dangerous so they needed to plan their attack with precision. The precise plan involved them only exiting their cabin when they a wounded animal passed nearby so they could leave the cabin, kill their prey, and take it back for food without too much risk on their part.
The connection of the hunter in the woods to trading is important. You should always be looking for the best set-ups, which are never guaranteed to produce a profit, but are opportunities with controlled risk. Continuing with the analogy, a trader without a system is like a hunter without a cabin, always exposed to attack and likely trying to hunt animals that outmatch him and thereby present a negatively skewed risk.
So how do you develop a strategy that keeps your risk minimal while allowing you to trade the Forex Market? You need to identify a handful of key trading aspects that suit your skill-set best. As a trader without a plan that you find satisfactory, you should start with this L.O.U.D plan:
-Learn how to identify a worthy trend / market environment to trade
-Objectively identify what a valid entry looks like on the charts
-Utilize Risk Management by determining Stop-Loss and Target Levels
-Define Time Frame that suits your analysis preference and lifestyle
The following weeks will break each of these strategy components down so you will know how to develop a style custom suited to you. Just like a set of golf clubs that aren’t fit to your body-style can wreck havoc on your golf game, trying to fit someone else’s plan that has shown success because it was fit to their skill-set could produce horrible results for you. If you’re brand new to trading and currently are working with a demo account, this will still be a great benefit to your trading.
Know that you know the components of a trading plan that are needed; here is a breakdown of the benefits. First, with a well thought-out trading play, you will be able to monitor your open trades with ease according to your trading plan. Secondly, a trading plan can introduce consistency that can help you turn your trading into a business. Lastly, a trading plan will help you qualify current market opportunities as well as knowing which opportunities are NOT worth trading.
I’d like to leave you with a quote from one of the best books on trading psychology in the market, Trading In The Zone, by Market Douglas.
“If there is such a thing as a secret to the nature of trading, this is it: At the very core of one’s ability
1) to trade without fear or overconfidence,
2) perceive what the market is offering from its perspective,
3) stay completely focused in the “now moment opportunity flow,” and
4) spontaneously enter the “zone,” it is a strong virtually unshakeable belief in an uncertain outcome with an edge in your favor.
The best traders have evolved to the point where they believe, without a shred of doubt or internal conflict that “anything can happen.”
-Market Douglas
While some of these components that Douglas referred to as the, “secret to the nature of trading,” may sound odd at first, the wisdom is solid and through years of trading, I can attest that they the cornerstone of a successful trading career. What’s more, the listed components come alive when a trading strategy that allows you act on opportunities in the market according to your strengths has been developed.
Before You Really Start Trading in Forex Market,You need to Choose a Best Forex Broker.
http://www.topforexbrokerscomparison.com
How To Build Your Forex Trading Strategy?
