A lot of beginner traders begin by knowing the strategies used by other traders in trading forex exchange. However, a lot of traders ask how they can get started with their trading strategy. Creating a trading technique is a breeze. Making a lucrative trading technique that will buy you a Porsche is difficult.
Begin with the appropriate beliefs. Creating a trading technique is simple. Know some trading software and signals, and you are able to carry it out. On the other hand, it is not sensible to believe that your first strategy in trading will make you a millionaire. Searching for an objective trading edge is hard. You will know that trading lucratively goes further than your trading technique.
The most excellent and sustainable way is to make your forex trading technique. Here are the steps to follow in creating a forex trading strategy presented by Forex Robot Nation.
First, check out this cool Forex Porsche Video:
Create Your Forex Market Concepts
Before making a trading strategy, first, you need to have an idea of how the forex market works. It is also vital to answering this important question. What makes you think you are able to earn money from the forex trading market?
Create your market beliefs by reading broadly. Read about fundamental and technical analysis.
Stay away from getting rich fast claims
Consider demand and supply
Doubt ideas that claim that people are rational
Your belief will define each step that follows.
Regardless, you need to follow one code in your trading strategy.
Pick a Market
If you opt for forex trading, know what you’re buying and selling with a currency quote. Ensure you know about the diverse forex brokers’ models. You need to be aware of how the margin is calculated.
If you opt for equities, then you must know the meaning of share. You should note the disparity between a penny stock and a blue chip. You need to know each market.
However, you are not able to begin to learn in-depth until you pick the market you want.
Pick a Trading Time Frame
Before gaining any trading experience, it is hard to settle on a trading time frame. You’ll not know if you’re more appropriate to daily swing or fast scalping trading. Hence, you can begin by considering your conditions. When trading fast time frames, you get quick feedback to cut down the learning period. Although you end up with long timeframes, what you discover from intraday price action will still be valuable.
Indeed, if you cannot watch the forex market for an extended period, beginning with the end-of-day charts. With constant effort, you are able to know enough to settle on if swing trading is ideal for you.
Pick a Tool to Figure Out the Trend
You do not trade once you witness a Pin Bar; you trade if the market is high, and you utilize a bullish Pin Bar to set off your trade.
You do not trade if you spot a Gimmee Bar. You trade if you think that the market is going sideways.
Settle on a reliable tool that assists you in evaluating the context of the market.
Define Entry Trigger
With the appropriate market context, you still want a goal entry trigger as it will assist you in entering the trading market with no doubt and hesitation. Both candlestick and bar patterns are valuable triggers. Once you choose indicators, oscillators like stochastics and RSI are the best choices.
Plan the Exit Trigger
You want a plan on how to exit if things go bad. The foreign exchange market can go not in your favor, causing losses further in your imagination. So, stop loss is vital.
Also, you want to plan on how to way out if things don’t go as expected. The forex market will not always be on your side. So, you have to know and identify when to make gains.
Define the Risk
After having exit and entry rules, your next move is to work on restricting risk. The initial way of doing this is through position sizing. For trading setup, your position extent determines the amount of money you’re placing on the line. Double the position and the risk will also be double. So, pay attention to position size very carefully.
Write Down Forex Trading Rules and Regulations
At this level, your strategy in forex trading is easy and simple. You may be capable of memorizing the rules. On the other hand, you should still take down your rules. Having a trading plan is a powerful technique to make sure discipline as well as consistency. Also, it offers a record of the trading technique. You’ll find it valuable if you’re trying to purify it.
Backtest the Trading Technique
With the help of written regulation, your next move is to backtest the trading technique. Once you have a discretionary trading technique, backtesting can be a hard process. You have to repeat the price action of the market and record the trades manually.
Once you have a mechanical strategy as well as a coding setting, you are able to accelerate this phase. However, looking in the trades individually is a remarkable way of developing the market instinct. This can assist you in creating ways to enhance your trading technique.
Plan How to Enhance Your Strategy or Technique
Your first technique in forex trading will not be lucrative. And that is fine. Keep in mind that your technique is not static but a living object. With growing experience and skill, this will improve and get better.
However, don’t leave this to a possibility. You need to make a plan on how you will get feedback and enhance your trading technique. Forward test the strategy and take note of the market observation.
Keep away from drastic alterations to your forex trading technique
For this last step, keep in mind that your objective is to obtain positive expectancy with each trade. Not constructive gains for every trade. Let statistics work for you, and never pressure your will on this market.
To Sum Up
Follow the steps mentioned, and you’ll get yourself with a good and reliable forex trading technique. Even if it’s not a holy grail, however, it’s created with experience and in accordance with your style in trading.
If you’re lucky, maybe Forex trading can get you a Porsche, if not, too bad!