FX Strategy: So, where’s your Plan B?
Becoming a successful trader is no easy feat. It requires time, dedication and in-depth market knowledge and understanding, as well as a tried and tested trading strategy that you have utmost confidence in.
In order to become an accomplished trader with a positive track record, it’s essential to apply the correct FX trading strategy from day one. The forex market is incredibly fast-paced and volatile by nature. As such, it makes sense to be logical and strategic about your every move.
Executing a trade on the forex market without a tried and tested forex strategy is incredibly risky. The ultimate way to combat the market is to have a number of solid strategies in your trading repertoire. This will ensure that in the event that your primary strategy is unsuccessful, you already have a backup strategy that you have tested meticulously on a demo trading account.
If your current trades are leading to financial and psychological destruction, perhaps now is the time to reconsider your current strategy. Your ultimate goal is to be committed to a trading strategy that gives you a solid trading career that will span many years.
The three main steps in successful forex trading are:
Before you begin trading you need to establish your goals and ensure you have the time, knowledge and temperament to successfully trade. From here, you need to create a strategy that matches your goals and temperament, test it on a demo account and ensure that it has an edge.
The next step is to develop a patient, disciplined and objective trading mind-set. There’s no point in setting unrealistic expectations – by carefully following your plan you stand a far better chance of developing a solid career from FX trading.
- Management and Implementation
Finally, you need to have a secure approach to risk management that always applies stop loss and take profit orders. Also, you should never trade with money you cannot afford to lose.
Your trading strategy needs to:
- Be simple and easy to understand
Everything about your strategy needs to be clean, simple and minimalist. If your strategy makes you feel confused and frustrated then your trades will suffer as a result, so ensure that your charts are tidy so that you can analyse them as simply and naturally as possible.
- Work across all timeframes and markets
Your strategy should also work across all timeframes and markets. Having a strategy that is universal across timeframes and markets facilitates everything about trading, ensuring that you can trade the market of your choice with ease.
- Offer a completely stress-free way to analyse the charts
It also needs to provide you with a stress-free way to analyse the market, otherwise you will end up becoming stressed and anxious because you cannot easily interpret your strategy (which will in turn lead to emotional trading).