One of the conditions to trade profitably in the Forex market is to have a well-developed, profitable trading strategy. Therefore, this issue is given special attention when training on the Forex market.
Why do I need a trading strategy
The Forex currency market has its own specific laws. Based on such laws, currency speculation is carried out. Market movement does not occur in a chaotic manner, it acts according to its own rules. Any experienced trader understands this and therefore uses some method in his work. With the help of a trading strategy, all transactions of a currency speculator are made. No professional will trade just like that, randomly or by intuition, entrusting his deposit with luck. There is a clearly defined order in each trader’s transaction.
Strategy selection
Each newcomer who enters the Forex market must decide on the trading method by which he will work. Forex trading strategies have a wide variety. Therefore, the choice of the appropriate method must be approached with great responsibility. Depending on the chosen strategy, the profit or loss of the future trader will be formed. Forex trading strategies are selected individually. The selection of the method depends on many factors, for example, such as:
1. The time range. A specific trading method is selected, for example, scalping trading or long-term transactions.
2. Acceleration of the deposit. The system of work with which the trader will work is taken into account. This refers to an aggressive or classic method.
3. The nature of the trader. The psychological factor also influences the choice of strategy. If the trader is inexperienced and timid, then he will trade carefully using the classics. Conversely, an ambitious, assertive, ready for various experiments, such a novice will use the aggressive trading method. Just for him it will be closer in its psychological characteristics.
Variety of trading systems
Any trading strategy is selected individually. Most novice traders use a ready-made technique. Over the many years that Forex has existed, and indeed the market itself, a large number of different strategies have been developed. Therefore, it is very difficult for a beginner at the initial stage to decide on the desired method. All strategies have certain parameters and are used depending on the requirements that the trader makes to them, as well as on the market situation. The following vehicle categories exist:
- Indicator-free strategies based on candles or bars. Such trading methods use
candlestick analysis, which is based on various candlestick configurations and patterns.
- Indicator, using various technical indicators in their characteristics.
And also strategies are selected depending on the state in which the market is located. If he is calm or is in the consolidation zone, then techniques for flat are used. And if there is a good trend movement in the market, then the appropriate trading strategy is selected. During the release of important economic news, a specific method is also selected. Even special trading strategies for working on the news have been developed.
Strategy Development
Since in the future the trader will have to work on this method, it is necessary to select and develop a strategy that would give good positive results. All factors must be taken into account, otherwise it will not bring the expected results.
The development of a trading strategy is based on the selected tasks. Each novice trader must determine for himself the necessary parameters, and also clearly and clearly know what results he wants to achieve, how quickly, for what purposes, and be sure to take into account the state of the market. It is impossible to use, remake and develop a flat strategy for large impulsive movements in the market. And vice versa. And also, if a trader wants to quickly disperse his deposit, then it is not recommended to use a strategy that is designed for the classics. It’s just that in this case, getting regular profits is generally called into question, and if it comes to overclocking a deposit, then the classical method is absolutely not suitable for this. Therefore, the most urgent task for the trader during the development of the trading method are the goals and expected results.
Vehicle Testing: Analysis
Suppose a novice trader has chosen for himself the method of work he needs. In the system he chose, all parameters were taken into account and goals were set. Now we need to analyze the performance of the new method. Such an analysis of trading strategies is carried out using testing. It can be carried out in two ways: on history and use a special TS tester for such purposes.
How to analyze the performance of a strategy on history? You need to select a specific time interval, set all the parameters that are used with the selected vehicle, and see what results it will produce. That is, how many unprofitable transactions, how many profitable, what total amount (number of points), maximum drawdown, maximum profit and other parameters.
But what about the analysis of TS performance in the strategy tester? It is carried out similarly. You also need to set the time interval, “drive off” the vehicle in the tester and analyze the results.
And the last, final stage: you need to analyze the vehicle on the training account in real time. To do this, you can use a demo account that the broker provides for its customers for free. And already after the trader receives certain results, depending on whether they are happy with it or not, you can start trading on a real account or refine your system.
Best Forex Trading Strategies
Usually, before starting to work in the financial market, each trader chooses for himself several TS with different parameters. It can be either ready-made or self-developed systems. Before using the TS on his real account, the trader tests them and analyzes them. Then he makes a selection, choosing the best strategies. Good systems have a large percentage of profitable indicators, minimal drawdown or lack thereof. And since the foreign exchange market is constantly changing and does not stand in one place, that is, it is in constant motion, then the methods are selected different, depending on its behavior.
For example, in a quiet, calm market, when prices are in the consolidation zone and are almost stamped on the same level, TSs are used that are designed specifically for such movement, that is, in flat. And if the market has a pronounced trend or strong impulse changes in indicators, in this case, the trader works with the appropriate system. The best technique for a beginner will be such a vehicle that he will understand well and know the entry and exit points, that is, when you need to open a deal and when it needs to be closed. Only with clear and clear signals can one conduct an analytical review of the market situation, conduct a trading operation on time and make a profit. It is advisable for beginning traders even at the very beginning of their work to have several TS for different variations that may occur on Forex.
The easiest trading technique
Of course, it is best that the trading strategy of the trader is not based on contradictions. It happens that the vehicle incorporates several technical indicators. And since they have different parameters and properties, their values may differ from each other. It turns out a contradiction of indicators. An experienced trader who has been trading in the foreign exchange market for a long time will easily understand how to act in this situation, but a beginner can get confused. Therefore, a trading strategy for a beginner should be quite simple, understandable and contain a minimum of indicators. An excess of technical tools on the chart not only leads to a contradiction between them, but also because of them the overview of candles is limited, namely they are really the main ones, since they show a change in price.
TS based on moving averages
AO is a very simple forex indicator. AO created a large number of different strategies. An example of a trading strategy.
Only 2 moving averages with indicators that can be selected individually will be required, in this case AO8 and AO13 are used. Entry into the market: at the intersection of the moving ones, if they are pointing up, you need to open a buy order, and if the joint-stock companies have a downward direction, you should sell. Exit, close the order: when they cross in the opposite direction. Interestingly, this is a very simple vehicle, quite "old", but nonetheless effective.
What strategy should a beginner choose?
Whatever method of trading a novice trader chooses, the most important thing is that he himself should understand how the TS works, the simpler its conditions, the better. Before you start trading on a live account, you must definitely test it on a training account, and then analyze and evaluate the performance of the methodology. The choice always remains with the trader, and if he takes into account all the advice given above, then the chances of finding a profitable trading strategy for yourself increase.