So you think you have a winning strategy for Forex trading. Have you tweaked and tested your winning formula? What you don’t know is that there are a few things you must take note of before putting your money completely on your strategy.
These are the points that have been tested and tried by those who have gone before you. Understand the principles behind them and you are likely to be on your way to trading success.
Think twice before day trading.
Few people are successful in day trading. Most experts are convinced that day trading does not work because of the high variability of volatility in such a short period of time. You are better off choosing long-term trading, because the chances of profit are reliable.
Fundamental or technical?
Are you a fundamental trader or a technical trader? What is your strategy? It is difficult to do both at the same time; combining these two approaches and methods is sometimes almost impossible and most difficult. In your strategy, it is easier to start with the technical side of trading. Not only will it take into account human psychology, but it will also be easier to work with.
Throw out the scientific theory.
We all know that Forex trading requires and objective point of view. Nevertheless, when it comes to your personal strategy, it has to fit your assets, investments and plans. This is why relying on scientific theories alone is difficult. If there really is a successful one, then why is not everyone a millionaire?
The objective part of the equation should be the trading signals you need to use when deciding on your next move. Now you see that there is a balance in hammering out your strategy.
You and your strategy work together. You are both disciplined in your mission. Ego can get in the way of successful and fair trading. What you think about the market affects the design of your trading plan. Be fair and reasonable, and you will profit. Overdone and greedy ideas will get you nowhere but down.
Finally, do you have absolute confidence in your unique plan? Testing and backtesting with the current parameters is crucial to gaining that confidence. You can even start with a small amount to test your strategy with as little risk as possible. When it works, resist the urge to change it drastically. Don’t make your details too complicated.
Hypothetical track records are unreliable.
This type of track record just keeps up and expects currency track records to be the norm. This is simply naive. Steady and steady does not always keep you safe. Forex trading is much more difficult than choosing which currency record is safer. At the end of the day, you have to make money, right? Instead of making sure bets, not losing, but not gaining anything in the end.
Is your strategy designed to be conservative with stop losses?
Stop losses are there to work in your favor. Use them. Most people place them immediately after the trade. If you think hesitantly, you will end up taking more losses.
Simple and works reasonably well
Your forex trading strategy should be designed to be simple and require a reasonable amount of input and work on your part. Too complicated a plan and you may lose sight of your unique skills. Too much work will cost you and cloud your judgment.