What A Complete Forex Trading Strategy Looks Like
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Most new forex traders will go from system to system, trying dozens of strategies with limited success. It's important to know what a complete forex trading strategy looks like.
The factors to be aware of are:
*Currency Selection - Which currencies will you be trading and why? It is a fact that every currency has it's own characteristics. For example the GBP/USD pair is very volatile and can move very quickly while the USD/JPY generally is a much less volatile pair with slower movements. The USD/CHF while being generally the inverse of the EUR/USD spends much more time range-bound. The GBP/JPY (aka "the beast") is usually the fastest moving currency with the biggest movements. Besides these properties each currency pair has a differnet spread that you will pay to your broker which will also influence your decisions depending on the pair you trade.
*Risk Management - How much of your account are you going to risk per trade? Most professional traders will advise you to never risk more then 2% per trade, others advise only 1%. Let's say that you are risking 2% and then after a bad string of losses you lose 50% of your account. Now you have to have a 100% gain just to get back where you started. Risk management is the key to successful trading along with knowing your win rate and what type of drawdown to expect.
*Entries & Exits - Successful traders know exactly when they will enter the trade and exactly when they will exit the trade. There is a very specific gameplan. Otherwise, you might as well try your luck at the local casino.
*Avoiding Trades - There are times when the market is stuck in a range or when extremely volatile news announcements are expected. These are times when you need to either avoid trading or exit your trades.
*When Do You Trade - Certain times of the day such as the US and European opens have more volatility then other times of the day like US afternoons or during the Asian session. Depending on what type of system you trade it's important to pick the right times. You wouldn't want to be trading a breakout strategy for example during a low volatility time of day.
By being aware of all of these factors you can start to think like a proffessional forex trader. Don't be a part of the majority that loses their money and gives up. |
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Author Resource:-
Get a mentor who undersands what it takes to successfully implement forex trading strategies.
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By :
Alex Harper
Submitted
2010-10-20 04:45:59 |
Article From Article Mayhem
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