Why You Really Need A Forex Trading Strategy: How to Build?

Why You Really Need A Forex Trading Strategy: How to Build?

Chitika   Februari 26, 2017

Forex trading requires a good strategy that must be built and planned well prior to trading. Here are the necessary steps of how to plan and build a good forex trading strategy.

What is a trading strategy?

In finance, a trading strategy is a fixed plan that is designed to achieve a profitable return by going long or short in markets. The main reasons that a properly researched trading strategy helps are its verifiability, quantifiability, consistency, and objectivity.

What is a trading plan?

A trading plan is a structure, or a set of guidelines, to define your trading activity. It can be an extremely useful tool to help you focus on planning and executing your trading strategy.

Forex trading is an exiting way to earn money provided that a good strategy is planned before starting to trade and also well followed during trading. Four basic factors must be considered in order to build a forex trading strategy which will be illustrated below.

First, the planner should determine the time frame which will be used during the forex trading .This will be a part of the forex trading strategy. The meaning of choosing the frame is to choose the period during which price will be noted for change. It may be in the range of minutes such as one minute or five minutes or in the range of hours or even days. Each period has its advantages and disadvantages. For example, in the high periods such as the one day period, the movement from one period to another will be high and thus there will be higher profits as well as high risk. The daily trading is considered long term forex trading strategy while low time periods such as hours and minutes are considered low term forex trading strategy.

Second, the analytical methods which will be used during forex trading must be planned carefully. This step is considered the most important one in the forex trading strategy.  It can be fundamental or techniqual schemes. The techniqual analysis depends on analyzing the curve of the currency pair price which will be traded. It uses techniqual schemes in order to predict the price movement in the future based on the history of the price. The most popular schemes are simple moving average, exponential moving average, stochastic, Relative Strength Index, MACD, and pivot point trading. The fundamental analysis depends on economical news analysis.

Third, money management planning must be considered as part of the forex trading strategy. What meant by money management is to determine the percentage of the forex account which will be traded, the profit limit, stop limit, and risk to reward ratio. This is very important in the forex trading strategy although it is ignored by many people.

Fourth, the entry and exit points must be determined according to the analysis used in trading the forex. This means to determine when to enter a trade and when to exit. This will deepens on the techniqual analysis used in studying the pair. For example, if pivot point is used as a trading strategy, the entry point may be the pivot line and the exit point may be the first resistance level.
Once the trader determined the four above points, then the forex trading strategy is built. An important thing to do after building it is to follow it carefully and respect the rules inside the forex e trading strategy.

The Philosophy Of Why Do You Need A Forex Trading Strategy

The Philosophy Of Why Do You Need A Forex Trading Strategy

Chitika   Februari 19, 2017

A good Forex trading strategy is important for any trader, however experienced or inexperienced they may be. With a good strategy, you can minimize your risks and make money.

The Forex market is considered to be the largest exchange market in the world. It’s fast gaining popularity as there is great possibility of earning huge profits. However, whether you are a newcomer or a seasoned trader, without a sound Forex trading strategy to guide you, you will be floundering around in the dark. Imagine a blind person trying to cross a busy intersection; that too without anybody to guide him - get the picture, huh?

If you are still wondering why you need a strategy, read on to find out.

Guides you onto the Right Path
When you become a trader, it is important to be consistent. A routine is essential in this respect. Once you have a routine and follow it diligently, you will have a better shot at being successful. That routine you seek for will be provided by a good Forex trading strategy. It will also help you measure your success and see what you’ve achieved at the end of the day. Without a routine, you cannot stay on track of your goals, and get results consistently. Besides having a strategy also means that you’ll inculcate a business mindset and bring in some professionalism to your trading.


You realize it's about the journey not the destination.
This applies to what was said above. If you want to create a profitable career in Forex, you need to focus more on the journey rather than the "prize" at the end. Doing so will help you test your systems more thoroughly so you know if they are built to endure through the long haul. It lets you stay emotionally balanced, even when you are going through a period of losses, and it lets you curb your enthusiasm when you're going through a string of wins. Forex is about more than just making money; there are a number of personal development lessons you'll come to realize and looking at Forex as a journey gives you a better chance of using the lessons to create profits.

You work well alone.
Most people aren't as self-motivated as they think, or as self-disciplined. However, true traders are. They are like lone wolves that can spend hours on end alone as they learn and develop their skills. It is important to have this quality as a trader because you have no one to answer to, except the market (and the market only speaks in terms of gains and losses). No one is going to tell you how to run your Forex career. No one will hold you accountable to your Forex plan and strategy. It's up to you to put in your all into becoming a proficient trader; and it is up to hold yourself accountable. If you're someone who requires hand holding, constant reassurance, or simply a boss to guide you, Forex may not be for you.

You know you will not be a millionaire in a year.
You won't even be a millionaire in three years. In fact, if you're starting Forex with the hope of becoming rich quick, you may want to reconsider the decision entirely. Creating instant wealth is a highly unrealistic goal. For one, there are too many factors a trader cannot control which play a key role in how much they make. Secondly, traders who enter Forex under the pretense of earning easy money are more prone to making mistakes and falling for Forex traps--all of which ensure that you lose more than you gain. If you are serious about creating a Forex trading career, you need to leave unrealistic expectations at the door and understand that Forex is like anything; it requires hard work, patience, and lots of discipline. Anyone who tells you otherwise is probably trying to sell you something.

You aren't afraid of failure.
It's important to note that you are not a failure simply because you lose money in Forex, but the fact is you can't come into Forex with a fear of losing or be someone that equates losing to failing. All traders, even profitable ones, go through a losing period. A trader has to focus on what they can learn from it and continue to develop their skills. A fear of failure will simply hold you back from consistent profits.

Helps to minimize Losses
For the unprepared man, the Forex Market will hold very little attraction. Without a good Forex trading strategy, he will not be able to make much headway or profit, and he is bound to get frustrated. If you attempt to trade in currencies blindly, without any clue as to what and why you are doing, you can give up any hope of striking it rich! Read my words clearly, lack of strategy is equal to financial losses. Therefore, to make the best of your investment, formulate a strategy and stick by it.


You keep learning.
Forex is not something you learn once and become a master of. The financial world changes constantly and with it does the rules of Forex trading. If you aren't willing to stay up to date, keep learning, and continuously test your knowledge you will struggle to make consistent profits. Keep an open mind as a trader.

You like to stand apart.
Creating consistent profits is heavily dependent on your edge. In order to even consider what your edge could be, you have to be someone who thinks outside the box, doesn't follow the crowd and looks to your own talents and personality as assets. The reason I included the latter is because most traders will find their edge within themselves. For example, you may be a highly focused individual, which could work to your advantage. Regardless, you need to be someone who doesn't follow the crowd and likes to stand apart if you're serious about creating an edge.

Helps you sharpen your Trading Skills.
Making errors in the Forex market is a luxury that is afforded only by newbies, since they invest relatively small amounts of money. If you want to be a seasoned trader, there is very little room for error. With the help of a Forex trading strategy you can sharpen your trading skills and try and hone it to perfection. Once you’ve set a plan for yourself, you can try and modify it according to the different situations you come across. Think of your strategy as the foundation on which your trading skills rest. Once you have a solid foundation, you can alter the exteriors of the building with ease.

The Essentials of a Good Strategy
Now that you know the importance of a Forex trading strategy, you need to know what goes into its making. These following points will elaborate what a good strategy is all about.

• Identify your goals and make them realistic
• Fix a time when you will sit down to analyze the market and plan out the trade. Along with this, also decide when you are going to transact and observe the market
• How often are you going to check the market and at what specific times?
• What’s the maximum percentage that you can afford to risk on each transaction?
• How many lots are you planning to trade?

Forex Trading Strategy Building and Planning

Forex Trading Strategy Building and Planning

Chitika   Januari 01, 2017

When starting to trade Forex, the trader must build first his own forex trading strategy. This is important especially for beginner traders. The forex trading strategy is considered like a plan that identifies how the trading will go. This includes identifying the analytical ways the trader will use to know the currency pair trend. It also identifies how the money in the trading account will be managed. Here are considered general steps to build your forex trading system.

1. Identify your time frame: each currency pair can be monitored over certain time intervals. The time interval can be in the range of minutes, hours, days, weeks, or months. When mentoring over a time interval of one minute for example, the value of the currency pair is monitored every one minute and displayed on the graph as an opened value and closed value for every minute on the forex trading chart.

The opened value is the value of the currency pair at the beginning of the time interval while the closed value is the value of the currency pair at the end of the time interval. What interval length is chosen depends on the trader personality and his external conditions. It also depends on the amount of money in his forex trading account. Many traders can be busy and cannot look at charts very frequently. This makes the minute or the hour intervals difficult to use. Also it depends according to the personality where some traders can be bored looking at the chart very frequently while others can be happy looking at the charts every hour or every two hours.

The most important thing when determining the interval value to monitor the currency pair over is the amount of money in your trading account. Longer interval times such as days and weeks will result in more fluctuations in the currency pair and more floating losses. This means that larger-valued accounts must use the larger time intervals. Forex trading accounts that have less money must use smaller time interval in order to be able to withstand the fluctuations in the currency pair chosen.

2. Identify your analytical techniques: in forex trading, currency pair trend prediction is the key to be successful in forex. If you are well able to predict where the currency pair will go in the future, you will be able to earn money.

There are two basic ways to use: fundamental analysis and techniqual analysis. Fundamental analysis means to track economic news of the countries that own the currency your are trading and use the news your are reading or hearing to measure the economy of that country. This way is suited for long term trades or trades that uses large time interval such as weeks or months.

On the other hand, techniqual analysis uses the charts directly to predict the trend of the currency pair you are trading. Every forex trading chart supplies you with huge tools that allow you to read the chart more intelligently.  These tools can be studied in any forex contexts but the most common are the moving averages, the pivot point analysis, the MACD, the stochastic indicator, and the RSI indicator.

In analytical analysis, you just identify two or three tools from the tools mentioned above and add them to the chart. This will allow you to study the chart and know the currency pair trend. When choosing the analytical tools, you must not use too many tools because this will make the analysis complicated. Only two or three tools are sufficient.

Second, the analytical methods which will be used during forex trading must be planned carefully. This step is considered the most important one in the forex trading strategy.  It can be fundamental or techniqual schemes. The techniqual analysis depends on analyzing the curve of the currency pair price which will be traded. It uses techniqual schemes in order to predict the price movement in the future based on the history of the price. The most popular schemes are simple moving average, exponential moving average, stochastic, Relative Strength Index, MACD, and pivot point trading. The fundamental analysis depends on economical news analysis

Third, money management planning must be considered as part of the forex trading strategy. What meant by money management is to determine the percentage of the forex account which will be traded, the profit limit, stop limit, and risk to reward ratio. This is very important in the forex trading strategy although it is ignored by many people.

Fourth, the entry and exit points must be determined according to the analysis used in trading the forex. This means to determine when to enter a trade and when to exit. This will deepens on the techniqual analysis used in studying the pair. For example, if pivot point is used as a trading strategy, the entry point may be the pivot line and the exit point may be the first resistance level.

Once the trader determined the four above points, then the forex trading strategy is built. An important thing to do after building it is to follow it carefully and respect the rules inside the forex e trading strategy.

Forex Trading Strategy Is The Key To Success

Forex Trading Strategy Is The Key To Success

Chitika   Oktober 02, 2016

When you enter the Forex trading business, you need to be prepared that it will not be cakewalk. It calls for a lot of planning and decision making. Without the proper Forex trading strategy, you will find it difficult to make much headway.

Before stepping into the Forex trading market, you need to have a certain strategies in mind. A well thought out Forex trading strategy can be your key to success. It can also keep you on the safer side and help to minimize your losses.

Implement a Proper Trading Plan and Don’t Trade Beyond Your Means

It is very important to have a trading plan and when dealing in Forex trading. Once you have a plan, let nothing deter you from it. Remember, there is no place for emotions in trading. Following your emotions blindly is a sure shot recipe to disaster. Whenever you trade, it should be in a cool and calm frame of mind.

A very good Forex trading strategy is that you should only speculate with money that you can afford to lose. Not to say, that you want to lose anything, but whenever you invest money or trade in it, you should always use money that you can do without, money that is in excess of your requirements. It is never a good idea to touch upon the money that you require to run your house and fulfill the basic requirements of your house.

Understand the Trends of the Market

In Forex trading, market trends are your closest friends. If you are able to understand trends and make somewhat accurate predictions, you will be quite successful as a trader. Understand that there may be short term fluctuations in the currency values. After all, the market is volatile. However, you should always refer to the long term trends and not be worried about periodic ups and downs.

Another important Forex trading strategy is riding the Forex market till it shows signs of turning around. Do not be greedy and ride the win too long, else you might just be caught off guard and lose money.

Trade Wisely

A lot of newcomers tend to look for some signs or leading indicators that will help them make a good trading decision. The truth is, in the Forex market, there is no guarantee that you’ll be able to predict the future accurately. Some software can help you make calculated speculations, but they could easily swing one way as the other.

A sound Forex trading strategy is that you should stick to popular currency for trading and stay away from thin market. Since there is very little public participation in the thin market, you will not be able to liquidate your position easily. Moreover, trading in too many markets is not advisable. Stick to the popular currency pairs till you learn to do better.

Update your Knowledge

Lear, learn and learn some more – and that’s a Forex trading strategy that will never fail you. Work towards gaining in depth knowledge in this field, so that you can become an astute trader. Read up as much as you can on the subject and add to your existing information. While a newcomer can get by with some general guidelines and tips, a seasoned Forex trader will need more knowledge to make decisions.