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Business 287 views Feb 13, 2017
Things to Remember While Building Your Own Trading Strategy

The forex or the foreign exchange market can be considered as the largest financial market in the whole world, in terms of leverage and regular turnover. People from all over the world buy and sell currencies in this market. If you are a newbie, you should research very well before entering this huge market. You should have a great forex trading strategy to have a successful forex trading career. The strategy of each trader is different. Some use strategies that are well-established, some use strategies that they built on their own, and some use a combination of these two. It is important that you develop your own style. You should be confident as well as comfortable with your strategy and the strategy should be such that it delivers results. If you are a beginner, you may find it difficult. So here are some basic rules to help you get started. (Information credit: Corner Trader).

  • Filter your inputs

All forex advice is not good. You should know where the advice is coming from and if the source is trustworthy. This is especially true when using the internet. There are many beginner traders who think that they are doing the right thing, but most of the time they are not.

  • Test your strategy

While developing your trading strategy, you may listen to what analysts and other traders have to say. This step is important, as this gives an idea about what others are doing. Then you can try their recommendations on your demo account and then modify them to check how it works. In order to achieve success in the forex market, you need to create your own formula.  This will help in improving your trading skills.

  • Go for long-term trends

It is true that there are traders who make money from short-term market fluctuations. But looking at longer time frames becomes important when you want to understand where the market is going. A lot of “noise” is present in short-term data and you can’t rely on it for overall market predictions.

  • Learn from experienced traders

It will be good for you to learn from experienced traders and forex analysts. They are still in the market because they know the market very well and they are successful. You need to study their strategies and learn from them. You should not follow them blindly. Think for yourself and see what works for you.

  • Include fundamental analysis

Based upon internal foreign exchange market factors like the number of sellers and buyers in the market, technical analysis shows the probable market direction. However, the real world greatly influences the overall direction of the forex market. You need to study economic events such as interest rate changes and growth figures and then understand how this can affect the forex market.

  • Set stops

It is not possible for you to watch the market 24 hours a day. So it is suggested that you set stops on your open positions. These are used to make sure that you gain profits and make fewer losses. These are actually sell orders that is given when the ask price of a currency reaches a specific value.

Well, this is not the entire list. There are a lot of other things that you need to keep in mind while creating your forex trading strategy. As you become more experienced, you may choose to ignore some of these and ad some of your own. However, following this list will be helpful for you if you are starting out.