Trading Strategies on Forex, Tasks and Features of its Construction
To learn how to earn on the currency market and to become successful trader, you should follow rules of the “Trading psychology” and also to understand, that you need to seek to create your own successful trading Forex strategy.
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Why?
The biggest challenge in trading is in the fact that no one knows for
sure whether the order is profitable or not. But everyone is able to
increase the probability of determining of the market motion, examining
different indicators and listening to the forecasts of the leading
traders.
What is the forecast?
It is the probabilistic assessment. I.e. it can either be true or not.
Forecast has some probability to be correct or false. To create more
reliable forecasts (i.e. the ones that have higher probability to
happen), you have to base on some reliable suggestions. Usually, these
hypotheses become the basic of the trading strategy on Forex.
Sooner or later the idea appears in the mind.
Why do you need the Forex trading strategy?
To have more profitable signals than the unprofitable ones and, as a
result, to increase the capital, not to lose it. If the trader is
trading without the strategy, he has nothing to rely on. There are
plenty of different facts, which trader could use to open and close
positions. Some of them may not bring the desired results. If the trader
finds the regularities, which will allow him to have profit at least in
6 cases out of 10, and the profit will exceed the losses, he can create
good, profitable strategy, based on these regularities. Although, the
trader can have only 3 profitable orders out of 10, which will bring
him higher total profit. It’s possible, when the profit of the order
exceeds the maximum risk in several times. Such situation is possible
due to placing stop loss and take profit.
How to find regularities?
You have to test this trading strategy on different currency pairs on the long period of the history.
You can use the strategy generator, as well as to find regularities by
yourself. You will need attention, patience, endurance and analytical
mind for this. Most of successful traders spend not one night looking at
the charts while searching for such regularities. Now everything is
easier, you can find enough information about using the indicators and
description of some strategies. Sooner or later the idea appears in the
mind. For example, the price often repelled from the integer. Let’s
create a hypothesis. For example, trader will get the profit, if he
enters the sell order every time, when the price grows up to the integer
number. Or the buy order every time, when the price decreases to it.
Now we need the criteria for closing the position. If the trader enters
the sell order near the integer number, stop loss can be placed at the
level higher on 10 points. Take Profit – 20 points lower. The same is
with the buy order, but stop loss will be lower, and take profit –
higher. Here is the ready hypothesis of the trading strategy on Forex.
The regularities can be also found with the help of indicators. The
description of some of them can be found in our list of articles.
Review
Now you have to try to refute this hypothesis. Why to refute? Trader has
to understand, how different factors influence the hypothesis. You have
to test this trading strategy on different currency pairs on the long
period of the history. Then longer historical period, that better. If
you refute the hypothesis, you should review the strategy or to create a
new one. Then, you will have to check it again. And so on until you
find really profitable and affective Forex trading strategy, which will
allow you to have a stable profit on the currency market.