If you want to win at forex trading you need a forex trading strategy that
can help you enter the elite 5% that make money and avoid joining the vast
majority of losers. This article is all about devising a forex trading
strategy for success in 5 simple steps.
1. Accept Responsibility
The first point to keep in mind is that you are responsible for your
own success – if you think you can buy success from a vendor for a few
hundred dollars - you are going to lose.
Only you can make yourself successful and this means you have to
develop your forex strategy on your own. The good news is, everything
about forex trading can be specifically learned and is free on the net.
2. Learn the RIGHT knowledge
Forex trading is all about learning the right knowledge – This is an
important point, many traders simply think the more the better in terms of
knowledge, but this is simply NOT true.
You get rewarded for results in currency trading and the accuracy of
your trading signals, not the effort you make.
Your forex trading system that you use in your trading strategy should
be kept simple and easy to understand. This way, ensures it will be robust
in the face of ever changing market conditions.
Simple systems work far better than complicated ones and have the added
benefit of being easy to understand by you – This means that you will have
the confidence to follow it with discipline.
3. Deciding Your Methodology
You will need to decide if you want to a technical or fundamental
trader.
By far the easiest is to be a technical one and use forex charts to
spot trading opportunities. You need to get the odds on your side and this
means NO forex day trading! It doesn’t work, as all short term volatility
is random. Instead, base your forex trading strategy on swing trading, or
long term trend following.
Both these methods will work and the one you choose is personal
preference.
You then need to have a clear understanding of support and resistance
and some momentum indicators to help you get into trades ( this is covered
in our other articles )essentially you need to confirm price momentum is
on your side when you trade. Finally, learn the concept of “breakouts”
it’s a timeless very profitable methodology.
4. RISK and Money Management
If you don’t like risk don’t trade forex markets. Most traders don’t
understand risk and are so frightened of it, they end up being to cautious
and lose. If you want to make money you need to take calculated risks, at
the right time. You need to have the courage of your conviction. If you
come into forex trading thinking you can risk 2% of your equity and make
money do something else, as you will lose.
5. Trading is in the head
Most traders fail because they cannot obtain mental discipline, to
follow their forex trading system through bad periods i.e. they lack
discipline due to lack of confidence.
If you develop your forex trading strategy yourself, you will
understand exactly how and why your system works - this will instill
confidence and from confidence flows discipline. Keep in mind if you don’t
have discipline to follow your system you have no system!
6. Realism
Sure people get rich quickly but that’s the norm for most currency
traders. You need to have a realistic forex trading strategy and that
means aiming for 50 – 100% per annum. If you can achieve this you will be
up there with the best and this will compound to a lot of money over time.
REMEMBER!
You don’t need to buy any material to construct your forex trading
strategy, its all free online. You just need to research it and avoid
people telling you that you can buy success from them, for a few hundred
dollars – you cant, there are no shortcuts. The good news is, everything
about forex trading can be specifically learned and you can do it all on
your own, if you are prepared to put in a little time and effort.
