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 doesnt 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 its a timeless very profitable methodology.
4. RISK and Money Management
If you dont like risk dont trade forex markets. Most traders dont 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 dont have discipline to follow your system you have no system!
6. Realism
Sure people get rich quickly but thats 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 dont 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.
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