HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
NordFX information and reviews
NordFX
86%

Why trading strategies fail?


Imagine you’ve thoroughly examined a set of rules and an algorithm of actions that should lead you to a profitable trade. You make sure that every step you take follows a popular professional strategy with hundreds of enthusiastic reviews and… you irretrievably blow your deposit. Who’s to blame—the strategy’s author or yourself? Why the same algorithms work in some cases, but don’t in others? Let’s find out.

Trading strategy always mean instructions that provide traders with a clear understanding of when to enter a trade, when it’s time to exit, and when it’s better to avoid trading altogether. Forex trading strategies take into account timeframes, currency pairs, and lot sizes

Dozens of classic and new original Forex strategies can be found on online forums and websites dedicated to trading. They are often touted as “magic wands” for novice traders and those who look for ways of making money online: from swing trading to scalping. Some strategies really do generate decent profits, but only under specific circumstances not every trader knows how to consider.

Martingale, a popular strategy, is a very illustrative example. This system suggests doubling the size of your trade every time you lose. Of course, it will work at some point. It can even be used to create a simple algorithm for automatic trading. However, the problem with martingale is that there can be seven bearish and bullish candlesticks in a row. Or even eight. The trader’s funds aren’t limitless, and if the number of losing trades exceeds a certain maximum, the series of losses will lead to a complete loss of funds.

Or let’s consider the basic trading strategy with three indicators. We’ll use two moving averages with equal periods and an oscillator. It seems easy: look at the MACD indicator, trade as the moving averages intersect confirmed by the oscillator’s signal. However, if we apply them to the chart, we’ll see false Forex signals.

Any strategy gives many false signals. Only when you’ve worked with it long enough and adapted it to your style, learned to feel its reaction to the price movement—only then you’ll be able to distinguish the important things and pay attention to the parts that seem unremarkable at the first glance. Sometimes fellow traders can point out entry points right before you that you missed. But both traders base their strategies on technical analysis.

The issue isn’t about traders hiding some important aspects of their “100% effective” strategies.

The thing is, any strategy is really a set of measures. It’s totally useless to follow the template and precisely follow the instructions from trading textbooks if you just don’t understand how the market works.

Detailed guideline isn’t a universal solution


When following a trading strategy, it’s necessary to combine different methods of market analysis. The most common ones were described in our previous post.

For example, the popular 3-period indicator RSI (Relative Strength Index) should be used on timeframes not older than 1 hour, Simple Moving Average indicators should have values less than 20. Longer periods require using Exponential, and MACD (moving average convergence/divergence) must be restructured. Furthermore, traders have to understand why it’s good to combine this strategy on Elder’s Triple Screen.

An example of Three Indicators strategy on Elder’s Triple Screen, GBP/USD

No method of market analysis is universal, and traders always have to adjust to the current situation and never let things run their course. Constantly studying all factors affecting the market movement, a trader starts acting intuitively at some point.

Of course, it’s possible to write a comprehensive guide to any strategy and include all these nuances, which would result in a doorstopper book.

But even in this case, traders face another problem: money management. It also has a set of specific rules that most market participants can’t adhere to. To make the right decisions and plan ahead, the trader has to know the percentage of their successful trades, which is, unfortunately, not that common among the market players. Wrong techniques, misunderstanding of how the leverage works, lack of a risk management plan can all lead to mistakes. All these factors are closely associated with psychology and the ability to control yourself when trading.

What’s to be done?


Well, we’ve established that blind following the ideas of others don’t help, and templates don’t work. Technical analysis done by two different experienced market participants can be as far apart as a Mercedes and a BMW. They even both may profit as a result, if they looked at different parts and predicted movement of different intensity and length. This can be compared to solving complex math problems by different ways.

So, in the first example below the chart is almost completely covered by technical analysis indicators. And it’s a functional trading system that’s been used for many years. The second example shows a clean chart with several lines. However, both traders make a profit.

The bottom line: study what others do and use it to create something of your own. To learn this, some go to a trading school, some do it on their own. Adapting a strategy to yourself should be done with regard to your temperament and trading style: contemplative and prudent people wouldn’t do well in scalping, while impulsive and energetic people will find it hard to place medium-term and long-term trades.

Having settled on a strategy, it’s important to form the general idea: dependency or regularity in the price behavior to base your prediction of its further movement. Then choose the currency pairs, timeframe and period, rules of entry and exit, trading lot size, and risk limits.

If all these parameters are set, we recommend testing your strategy on a Micro account with small sums of money and real market quotes, and only then moving to a Standard account with a minimum deposit of $100.

Those who don’t feel confident that they can take into account all risk factors, but want to make money, there’s a simpler way: RAMM copy trading service. This platform is integrated into your Private Office and enables automatic high-precision copying of trades placed by professionals who can use trading strategies effectively.

#source


RELATED

How to Make a Cryptocurrency Trading Plan

With each passing day, more and more traders join in on cryptocurrency trading. It’s unsurprising, considering the cryptocurrency market has been rapidly expanding for over a decade...

The Intricacies of Short-Term Trading: A Comprehensive Exploration

In the intricate tapestry of financial markets, short-term trading emerges as a dynamic segment, renowned for its rapid pace and the transient opportunities it presents...

Profitable Forex Trading Strategies Nobody Tells You About

One of the key aspects to be successful in trading is to maintain a high level of discipline. One keyway to enforce discipline on the FX market is to have a robust...

Trading exit strategies: How and when to exit a trade

Imagine being so in control of your exit strategies that you could come out of a losing trade without feeling any emotion and simply move on, unaffected...

Top Bitcoin Trading Strategies to Make Money

The phenomenon that is Bitcoin has gripped the mainstream market primarily due to the fact that the digital currency has shown it is a good way for people to make money...

How To Cut Losses Trading Cryptocurrencies

Even good trading and investment strategies can lead to portfolio losses if the basic rules of money management are neglected. In addition to the basic rules typical for investing and trading any assets...

Mastering Trend Trading: Strategies and Risk Management for Beginners

Trend trading, a cornerstone of successful financial market navigation, capitalizes on the consistent upward or downward movement of asset prices...

Exploring the Efficacy of Forex Hedging Strategies

The world of forex trading is marked by its dynamic nature, offering substantial opportunities along with inherent risks. In an effort to mitigate these risks and protect their investments

Balancing a Day Job and Day Trading: An Expanded Strategy for Success

The world of day trading operates at a rapid pace, distinct in its pursuit of quick turnarounds and its reliance on minute-to-minute fluctuations. Traders buy and sell stocks, commodities...

Range Trading: A Simple Forex Strategy Explained

It is natural for all traders to seek the best possible technique for achieving their trading goals. As range trading becomes increasingly popular, more and more people are looking...

Best Forex Manual Trading Strategies: Grid Trading And More

Manual forex strategies differ from automated and semi-automated trading methods in that all market analysis and other actions are performed by the trader, without the use of additional indicators...

Best times to trade popular financial instruments

Trading in the financial markets in a way that increases your potential for success requires skill, expertise, vigilance, and grit. Knowing the best times to trade the market is dependent...

Empowering Traders with Advanced Risk Management Strategies

In recent years, CFD trading has witnessed a surge in popularity, drawing ambitious traders with promises of direct access to global markets and the potential for success...

Strategy for trading bitcoin in the Forex and CFD market

Cryptocurrency is a new financial instrument that has won traders attention around the world. This tool is different from traditional assets in terms of its volatility...

Beginner’s Guide: How to Hedge Your Crypto Portfolio

Although the cryptocurrency markets offer numerous opportunities due to their volatility, they can also lead to significant fluctuations in profit and loss, causing uneasiness. Employing hedging strategies...

Top IronFX Forex Trading Strategies in 2022

A forex trading strategy refers to a unique technique used by forex traders to guide them regarding whether or not to buy or sell a currency pair at any given point...

Trading The Gap: What Are Gaps & How To Trade Them?

All traders occasionally encounter the phenomenon of price gaps and might get confused. Gaps are encountered in all financial markets and most often appear on Monday...

How to Build a Winning Forex Trading Plan?

Many traders start trading Forex in hopes of making quick and effortless profit. It’s true that the Forex market presents many opportunities for traders to earn money off of price movements...

Top 10 Strategies for Earning Passive Income with Crypto

Passive income in the context of cryptocurrency refers to earning income from digital assets without actively trading or participating in day-to-day activities...

Free Forex trading system that works

Financial markets shouldn't be traded without a sound tried and tested trading system, and the Forex market is no exception. Making the right...

Vantage information and reviews
Vantage
85%
FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.