Trading Strategies on Forex, Tasks and Features of its Construction
To learn how to earn on the currency market and to become successful trader, you should follow rules of the "Trading psychology" and also to understand, that you need to seek to create your own successful trading Forex strategy.
Creating a Trading Strategy
The biggest challenge in trading is in the fact that no one knows for sure whether the order is profitable or not. But everyone is able to increase the probability of determining of the market motion, examining different indicators and listening to the forecasts of the leading traders.
It is the probabilistic assessment. I.e. it can either be true or not. Forecast has some probability to be correct or false. To create more reliable forecasts (i.e. the ones that have higher probability to happen), you have to base on some reliable suggestions. Usually, these hypotheses become the basic of the trading strategy on Forex.
Sooner or later the idea appears in the mind.
Patterns of Forex Trading Strategies
To have more profitable signals than the unprofitable ones and, as a result, to increase the capital, not to lose it. If the trader is trading without the strategy, he has nothing to rely on. There are plenty of different facts, which trader could use to open and close positions. Some of them may not bring the desired results. If the trader finds the regularities, which will allow him to have profit at least in 6 cases out of 10, and the profit will exceed the losses, he can create good, profitable strategy, based on these regularities. Although, the trader can have only 3 profitable orders out of 10, which will bring him higher total profit. It’s possible, when the profit of the order exceeds the maximum risk in several times. Such situation is possible due to placing stop loss and take profit.
You have to test this trading strategy on different currency pairs on the long period of the history.
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 successful traders spend not one night looking at the charts while searching for such regularities. Now everything is easier, you can find enough information about using the indicators and description of some strategies. Sooner or later the idea appears in the mind. For example, the price often repelled from the integer. Let’s create a hypothesis. For example, trader will get the profit, if he enters the sell order every time, when the price grows up to the integer number. Or the buy order every time, when the price 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 stop loss will be lower, and take profit – higher. Here is the ready hypothesis of the trading strategy on Forex. The regularities can be also 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. Why to refute? Trader has to understand, how different factors influence the hypothesis. You have to test this trading strategy on different currency pairs on the long period of the history. Then longer historical period, that better. If you refute the hypothesis, you should review the strategy or to create a new one. Then, you will have to check it again. And so on until you find really profitable and affective Forex trading strategy, which will allow you to have a stable profit on the currency market.