Successful forex trading requires a combination of proven and well-established trading strategies, also known as trading plan, and of solid rules which one needs to follow to control risks. With IronFX, using these strategies will help traders take advantage of Forex trading and potentially increase their success levels. Both newbies and professional traders will be able to build, test and reflect on their trading strategies.
What is a Forex Strategy – The Basics
A forex trading strategy is a technique used by forex traders to decide whether they will buy or sell a currency pair at any given time. Forex strategies can be formed based on technical or fundamental analysis and trading news-based events. Thesecurrency-trading strategies usually consist of trading signals that trigger buy or sell decisions. They are available online or may be developed by traders themselves.
Forex trading strategies can either be manual or automated techniques for generating trading signals. The former involves a trader on his/her personal computer, seeking trading signals and determining whether to buy or sell. The latter involves a trader developing an algorithm that tracks trading signals and executes trades by itself.
Thoughts on Forex Strategies
Most of the times, traders tend to rely on trading strategies that have not been thoroughly tested. The truth is that many traders spend hours searching all over the internet for the most suitable strategy. Most of the times they end-up not finding one. The best and only solution is to test the strategies for yourself and see what actually works. Most of the new traders start off by learning or copying the trading strategies of other more experienced traders.
Forming a trading strategy is easy. Set the right expectations, learn how to use a few trading tools and indicators, and you are half way there. However, it is unrealistic to believe that your first forex strategy will definitely be successful.
Then, multiple questions keep popping-up such as ‘Why should I still form a trading strategy?’ or ‘Why not just copy the trading strategy of a successful trader?’ Traders could share their tips and approaches, but no trader can vouch for your success. Every trader is different. Therefore, a combination of multiple techniques or even creating your own trading strategy would be your way to success.
Steps to a Successful Forex Trading Strategy
- Improve your Trading Strategy. Your forex strategy is changeable. Not permanent. As you grow as a trader and as you gain experience, your strategy will also be improving. You can always plan how to do so by recording your trades or by avoiding drastic changes.
- Choose a Market. As a trader, you must be specific on what currency pairs you trade and understand what you buy and sell as well as the various models of forex brokers.
- Set a Time Frame. Define what kind of trader you are; day trader or swing trader. Then you will be able to define if you have time to speculate on the market for extended periods. This approach will help you stick to a time frame you will eventually use to trade, although there might be multiple.