Forex Income

Developing a Forex Strategy

A fool-proof trading strategy can help you gain profit from day one in the Forex market. If you spend some time to study the market you will find some price patterns that recur consistently.

You can substantiate your observations with charts or graphs using a strategy builder software and then finally develop a strategy unique for your trading habits.

So developing a sound and effective trading strategy is the important foundation of the trading. You must develop working knowledge of technical analysis as well as knowledge of some of the more popular technical studies before deciding which is going to be the best strategy for you.

A trading strategy should optimize your risk with respect to the reward, or vise versa. It should have a disciplined method of limiting the risk and make the most out of favorable market moves.

Using Technical Analysis to Build your own Forex Strategy

Technical analysis can supplement your trading strategy. Many professionals for example make use of moving averages along with other indicators. This method has an element of risk control (built-in) – where a long position will be stopped out fairly quickly in a falling market generating a stop-and-reverse signal or a sell signal in a rising market

At the initial stage you should rely on a logical system in having a view of the market. Discipline will be the keyword for establishing yourself as a successful trader. Your trading decisions should not be based on irrational emotions where you continue to experience losses with the hope of regaining the position. Your ability to limit your losses is just as important as determining the entry points.

For example you can be more comfortable with a mini account where the pip value is just $1 per pip which limits the losses as well as helps you in gaining confidence. In a mini account, a 30-pip floating loss is approximately $30 but the same 30-pip move on the 100K account becomes a $300 floating loss.

Choose Your Forex Broker Wisely For Best Results

Your strategy should be supported with intuitive and user-friendly trading software which will have a rapid execution from live, streaming prices and fixed spreads intra-day and night. You should increase your trading size as your confidence builds.

Choose a trading platform that allows you to formulate and test trading ideas in identify opportunities in real-time. An automated trading system will save your time with fast executions.

You should only risk 1-3% of the available capital allocated to your trading. You can calculate that using the size and, the difference between the entry price and maximum stop price.

You should always be comfortable with the size of a trade; the moment it turns you uneasy you should bring down the amount. Staying for long in any forex trading market is the key factor for making money. Therefore, you should trade slowly over a longer time with minimal risk.

Your trading platform should be based on a positive expectancy system. Your profit will be directly proportional with the number of trades your system actually makes, how much capital you allocate and how accurately you use the trading signals. Expectancy is calculated using profit or loss on each trade - dividing that by the initial risk, and then taking the average from a series of trades.

The Right Forex Strategy = Unlimited Profitability!

Some of your conventional as well as online forex broker systems can offer you only marginal profitability and trading implementation costs like high commission, wide spreads, and large amounts of slippage. This can be avoided by carefully choosing the right broker.

If you decide that you wish to pursue building your own Forex trading strategy then please go careful, perhaps re-read this page to make sure you fully understand the key rules to follow.

If you perhaps feel you are not quite ready to develop your own Forex trading strategystrategy service reviews section and learn more about the various strategy services available. then you may wish to view our