Wednesday December 28, 2016 - 16:54:50 GMT
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How to develop your own trading strategy
Most of the retail trader in the forex industry suffer from an extreme level of indecision when it comes to trading strategy. They start trading the forex market with the help of randomly picked strategy. After the test the trading strategy for one or two weeks, they jump into new trading strategy and think that this is the best trading strategy for themselves. And this thing goes on for a long period of time until the traders find a suitable trading strategy in the forex market. But to be precise this not the way that traders should pick their trading strategy. Rather you should build your own trading strategy based on your personal characteristics in the market.
Those who are trading the financial instrument successfully for a long period of time have been using their own developed trading strategy. It’s true that you can learn extremely profitable trading strategies in the market but in reality, it will come to no use since every single individual trader needs to develop their own trading strategy. In this article, we will briefly discuss how to build a valid trading strategy for you based on your personality.
Understand the meaning of the word plan: The first thing that you need to do as a trader is to understand the meaning of the plan. We can make tons of trading plan for yourself it will be of no use if you don’t follow them properly. Before you develop your own trading strategy make sure that you are truly committed to yourself. No matter what happens in the world you will not deviate away from your trading plan. Most of the professional traders always stick to their trading plan regardless of the market conditions and technical parameters.
Develop strong foundation about the forex market: Before start developing your trading plan make sure that you have a clear understanding of the forex market. If you don’t understand the in and out of the forex market then you will never be able to make a good trading plan. For understanding the financial market properly you need to go through many different articles and trading books. Make sure that you clearly realize every single term in the forex market. The first part of trading is technical analysis. In order to have a strong foundation, you also need to master the art of technical analysis. This will allow you execute high probability trades in the market by seeing the different parameters in the chart.
Fundamental and sentiment analysis extremely important in forex trading. Fundamental analysis will help to understand the economic performance of a certain country. Without knowing the overall performance of a certain country it will be extremely difficult for you trade the live currency rates in the market.
Sentiment analysis is considered to be most power analysis in the forex market. Sentiment analysis is nothing but the overall traders’ sentiment in the forex market. Sometimes the forex market ignores the technical and fundamental analysis and moves in favor of the market sentiment.TO be precise you need to master this three types of analysis in the forex market in order to develop your own trading strategy.
Choose you desired time frame: Choosing the right time frame is extremely important for the forex traders. As a professional trader, you need to know which time frame trading suits you the best .You might choose the smaller time and trade with high volumes in the market. On the contrary, you might choose the longer time frame to trade the financial instrument with wide stop loss and take profit level.
Set a specific goal: There are many traders who claim to have the best trading plan for themselves. But in reality, their trading plan is incomplete since their trading plan doesn't come up with a specific goal. When you will develop your trading plan make sure that your trading plan has a specific goal. A plan without a goal is like a ship with a hole in its middle. So make sure that you know your preferred goal before you start making your trading plan in the market.
Make a flexible trading plan: The forex market is a dynamic market and it’s continuously changing with the time. So when you develop your trading strategy make sure that your trading strategy is flexible and can adapt to the dynamics of the forex market. If you develop your trading strategy based on strict rules then your trading strategy will not work in the long run. Make sure that you don’t make things too complex. In the eyes of expert forex traders, the best trading strategies are the simplest trading strategies in the word.
Money management: Proper risk management factor is one of the key ingredients that helps the forex trader to remain profitable in the forex market. When you develop your trading strategy make sure that you are using proper risk management factors to deal with your losing trades. Most of the successful traders are losing more trades in the market yet making tons of money simply by using the right money management.
Summary: Before you start developing your own trading strategy make sure that you have a clear understanding of the basic of the forex market. Once you have a clear idea go through as many different trading strategies as you can. This will help you to gather a generalized idea about the different trading strategies in the forex market. So when you will start developing your trading strategy make sure that you remember all the basic parameter of trading and incorporate a specific goal and proper risk management factors to your system.
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