Forex trading strategy

admin — Sun, 03 May 2009 12:46:35 +0000

Here are some forex trading strategy (you can also use it for option) that can save your life:

Set a Stop Loss: Before entering any trade, decide beforehand the amount you are willing to lose and stick to it, set a stop loss on the trade before you enter. I usually set maximum loss of 10%.
Do not be emotional about a trade, you will lose some and win some – just know it.
Do not be greedy.
Stick to your game plan, move your stop loss as the market moves in your favor and let your profits run. My plan is to go for low leverage, minimum $100 entry, and focus on one currency pair mine is EUR/USD.
Don’t be influenced: You have your own game plan stick to it.
Draw resistance and support line so you will know when to sell and when to buy.
Don’t enter vary volatile market where you can see price up or down very fast and the bounce very fast too. This is a situation where you can not predict. This is gambling.
Trading is a game of probabilities, and over the long run as long as you stick and implement sound strategies and stay consistent.
Success is much more likely to come. To be a successful trader you should never take a position that puts substantial capital in jeopardy. In actuality you will rarely find successful traders who risk more than 10% of their account in any trade. You might want to start small and increase your trade sizes as your confidence grows.
Know your risk vs. reward ratio: The minimum ratio you should be using is 2:1, so if you are successful on 50% of your trades you are doing well. For instance, if you are long GBP/USD and you want to earn 30 pips you should not risk more than 15 pips. You should never risk 30 pips in order to make 10 pips.
Have adequate capital: You should never trade with money that you cannot afford to lose.
Trending or Neutral: Learn to analyze the market; is it a trending market or a neutral market? In a trending market then follow the trend. in a neutral market buy on lows and sell on highs as long as you use stop-losses you are controlling your risk.
Although forex is 24/7 not every hour is suitable for trading. If you are looking for volatile, liquid market then I suggest enter when London starts and end their session. London Market Hours: 3:00 am to 12:00 noon EST.
Don’t fight the trend
Averaging – don’t do it: One of the most common mistakes traders make is the continuing adding of a losing position. Averaging will be the death of short-term trades.
Know why you are in the trade: Keep a trading log, and write down why you entered a trade.

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Forex trading strategy