If you want to earn on the currency market and become a successful trader, you need two things: understand the trading psychology and exploit it with your trading strategy.
Creating a Trading Strategy
The biggest challenge in trading is that no one knows for sure whether the order is profitable or not. But if you listen to forecasts and understand the situation on the market, you can increase your chances of success.
Forecast attempts to predict the future state of the market. It is not accurate and can't be considered a be-all, end-all solution, but it does create more reliable estimates. Current Forex forecasts are good enough to become the basis of the trading strategy on Forex.
Sooner or later the idea appears in the mind.
Patterns of Forex Trading Strategies
Strategies make finding profitable trading signals easier. Also, they make you stick to your trading plan and not venture into risky opportunistic trading. Without a strategy, you end up getting swarmed by trading signals and may open positions without an understanding of the market situation. It's generally better to open five positions and win 4 of them than open 10 and win the same 4. Trading strategies allow you to focus only on the positions that you are sure to win and easily ignore the others without being tempted by "what-ifs."
Right Forex strategies work efficiently across different currency pairs and offer the reward that exceeds the risk by two or more times.
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 the successful traders spend not one night looking at the charts while searching for such regularities. Now everything is more accessible. You can find enough information about using the indicators and description of some strategies. Sooner or later the idea appears in mind. For example, the price often repels from the integers. Let’s create a hypothesis. For example, a trader will get the profit, if he enters the sell order whenever the price grows up to the integer number. Or the buy order every time, when the amount 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 prevent loss will be smaller and take advantage – higher. Here is the ready hypothesis of the trading strategy on Forex. The regularities can also be found with the help of indicators. The description of some of them can be found in our list of articles.
Now you have to try to refute this hypothesis. The trader has to understand, how different factors influence the theory. You have to test this trading strategy on various currency pairs in the long period of history. The longer historical period is, the better. If you refute the hypothesis, you should review the strategy or create a new one. Then, you will have to recheck it. And so on until you find a profitable and effective Forex trading strategy, which will allow you to have a stable profit on the currency market.