So, you are new to Forex trading and this is your first time learning about trading strategy. If you want to succeed in this business, you need to know which Forex trading strategy works best for you. Your trading strategy can develop and grow, as long as you keep on practicing it. Keep in mind, though, that having Forex knowledge is a must as education and knowledge are the basic fundamental to successful trading. So, if you want to learn about the strategy and develop it, here are the things you should do.
Develop Your Own Plan
Don’t forget that professional and skilled traders will do these 3 important things: make a plan of the strategy, follow the trend and market, and they make a record (something similar like a diary) so they can track and analyze each trade that they have been involved in.
The first thing to do is to make plans of your trading activity. If you fail to make plans, it is most likely that you will fail in your trade. That’s why it is crucial to creating a solid strategy and stick to it. And how do you plan to do so?
- Choose currency pairs. Make sure that you choose a pair that feels right to you. After all, currency pairs have different characteristics and nature. Some of them are steady and stable while some may move drastically even within a day. Decide on your own risk parameter and decide which pair is suitable for your trading plan and strategy.
- Determine the length of time you plan to stay within a particular position. Are you planning to do it in minutes or days? You need to consider your account type as well as the pair and market position. For instance, when you have an open position around 5:00 Eastern Time will affect in rollover charges.
- Develop plans for position and targets. Planning an exit strategy is important even before you make a position. In case, the position is a winner, at which rate do you plan to cash out? In case it is a loser, how much do you plan to cut to reduce loss? Such planning is important if you want to implement limit and stop effectively.
Follow the Market
It is always a good idea to follow the market. By doing so, you can monitor all the information coming in and get the updates, including the technical level affecting your position. The first thing you can do is to use the Forex chart, which is good and handy to improve your trading returns. And then you can follow the news, so you can get the details on the most current economic reports, political events, and other factors that can affect the market. You can even get detailed comments and strategies from expert traders – it will help you a lot.
Make a Diary
It’s not like the ordinary diary because this one is used to keep track of your Forex trading activity. A lot of traders fail because they tend to repeat the same mistakes over and over again. By keeping a diary, at least you know which strategy works the best for you and which isn’t. Basically, you are free to write anything you want, but if you want to keep track of your performance, here are the things you should include:
- Time and date when you take the position, as well as the time and date when you exit the position
- The rate when you take the position, as well as the rate when you exit the position
- The main reason why you take the position, and also the reason why you exit the position
- Your developed plan and strategy for that particular position
- Your loss or profit for the position
- Whether you follow your strategy or not
By having a diary, you can see a recurring pattern that can help you with your trade. Once you are able to see the pattern, you should be able to have better and more solid strategy.
Keep in mind that knowing and understanding the pattern takes time; not to mention when you are developing a successful planning. Give yourself a time; don’t rush things. If you are patient, you will be able to train yourself and become a successful trader.