Developing your trading strategy for the first time
The new traders always start with a big dream. The start with big investment and try to secure financial freedom in life. But do you think any participant can make a profit from the Forex market without doing the hard work? Most of the time, the traders set unrealistic goals and try to make a big profit. The thing is, you must educate yourself properly before you consider Forex as your fulltime job. You have to create a balanced strategy so that you can deal with the price movement.
This article is going to give you some useful advice to crate your first trading strategy. People are always reading about the different trading system but they don’t know the development process. Focus on this content and you won’t have trouble in developing your first trading strategy.
Identifying the market direction
The first thing is to identify the market direction. In the professional term, it’s called finding the trend of the market. Your first trading strategy should be based on the trend trading technique. If you try to create the system to trade the major reversal, you are going to lose most of the trades. Learn to analyze the daily chart and focus on the trend line tools. With the help of the trend line, you can predict the trend with 100% accuracy. Once you get the direction right, you have done the 50% work in the development of your first trading strategy.
Using the most reliable candlestick pattern
Since this is the first time you are developing a trading strategy, you have to carefully select the trading approach. Stop getting used to the indicators or EAs and start learning about the most popular candlestick pattern. Looking at the price action signals at the key support zone. But never execute the trade if it’s against the major trend. And open the trading account with the best ib introducing broker so that you don’t have to face any delay in price feed. Delay in the price feed can ruin your trading career in a great way. However, if you start to use the major candlestick pattern at the key levels, you won’t have complicated problems with your trade executions.
Develop an advanced money management plan
Developing an advance money management technique is more like giving a finishing touch to your trading strategy. Those who want to use aggressive methods should not trade the Forex market. The aggressive traders are always having trouble to deal with the loss. Most of the time they are losing money since they don’t know the fact, trading is more like managing the risk exposure most effectively. So, if you intend to develop the perfect strategy, you must incorporate the perfect risk management policy.
Many people are using a world-class trading strategy. Still, they are losing money. There is nothing wrong with the trading strategy. The retail traders are losing money since they are using them too much risk. The quality of trade signals generated by your strategy doesn’t define the profit factors. You have to think about the risk exposure level. If you can trade with managed risk and aim for big profits, you have a decent system.
Fine-tune your strategy
You must have known the INS and OUT of the development process of a trading strategy. But don’t start trading the real market just after developing a trading strategy. You have to use simulation software or demo trade the market with the new strategy. If you can manage to make a consistent profit in the demo environment, you can switch to a real account. On the contrary, if you fail to make a consistent profit, find the faults in the system and fix those issues. Learning to find faults is a great skill for retail traders. And fixing those issues develop the confidence level to a great extent. So, follow these tips and you will be able to create your first trading strategy.