Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.


Forex Trading: Creating a Strategy

Recommended Posts

One common mistake for those who are entering the world of forex is to start trading without a strategy. Because of the attractive features of this market, most new traders are starting too eager to test themselves. This approach is dangerous because they often believe they can operate earning right away, sometimes they also think that they can make a fortune in a short time, but pretty soon they get tired and end up having the wrong approach that leads them to a path of repeated losses.


The first step to operate profitably is to create a strategy or trading plan. Creating a trading strategy is of crucial importance and is also quite easy. To proceed with the creation of a strategy, traders should consider the following:


Before opening an operation there must be a good reason. Very often traders open operations out of boredom or to feel involved, but with these reasons you go straight to the disaster. The reason to buy or sell a currency pair has to make sense, does not matter if it is based on fundamental analysis or other techniques, the important thing is to have a reason.


The choice of the currency pair to trade can seem simple but in reality it is not. Experienced traders always suggest to focus on some of the main cross (EUR / USD, GBP / USD, USD / JPY).


Define the timing, especially when placing the operation and how often to perform trading operations. From here you establish if you are day trader, or if you prefer to hold positions for longer periods of time. You must consider whether to open positions before or after important economic news, if during the night, the opening of different markets etc.


Define the objectives, the ultimate goal of trading. What are our objectives of take profit and stop loss. It is important to try to place your take profit and stop loss before entering the market, since they can always be changed later if the market changes. Most traders tend to close the transaction quickly, in case of profit, while allowing continued operation in case of loss.


Placing a stop loss at the beginning of the operation will be easier to have a reference point, and it will allow to have more discipline. In addition, many beginners tend to have very unrealistic goals. You can have high returns during the first year of investment, but it is not easy to achieve. With these unrealistic expectations, many traders do withdraw, even before they had time to learn the behavior of the market.


For the first year, the draw is a good target. In fact, the majority of traders do not get to draw and those who make 20% or 30% on their initial investment can be counted on fingertips.


Money management is the main aspect of trading. First you have to accept the fact that no one can have 100% of transactions closed in positive, and that everyone, even the experts can make mistakes. The key point is to accept the fact of being wrong, before the mistakes can affect your money. To do this you must specify the amount to invest, after which what you are willing to risk on each transaction.


The more experienced traders risk 1% to 4% of what they have on the trading account. Although to the new traders may seem too low, this will help avoid big losses and create the necessary discipline that, by continuing to operate in the market, will help to enhance the experience. It is very important to have a higher percentage of transaction and a positive average profit higher than average losses. If the average loss is twice the average winnings then the traders would be forced to close 10 transactions in positive, to cover 5 negative.

Share this post

Link to post
Share on other sites
Guest muhitalam

It`s really helpful for me. Would you please tell me the best Strategy to get success on Trading.


Very much looking forward to hearing from you.



Share this post

Link to post
Share on other sites

Hello 6Oceans,


Thank you very much for this post. I really appreciate it. This one my 1st post. i want to know little more about trading... Would you please tell me the best Strategy to get success on Trading.


Very much looking forward to hearing from you.



Share this post

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Similar Content

  • Topics

  • Posts

    • Date : 20th February 2020. Yen tumble continues - 20th FebruaryThe Yen has continued to tumble, and is showing a near 2% decline against the Dollar from yesterday’s opening levels.USDJPY printed a 10-month high at 112.10, just 28 pips away from its 10-month high, and EURJPY posted a 2-week high, at 121.00.There have been reports over the last day of major fund managers cutting yen longs, including against short regional Asian currency hedge positions, though most Asian currencies came under fairly heavy pressure today amid concerns about the coronavirus outbreak spreading regionally at an increased rate. There has also been talk of Japanese funds buying US Treasuries. While China reported a large drop in new coronavirus cases, just as the PBoC delivered an expected rate cut, South Korea and Japan reported increases in new cases.This news led to a mixed performance among Asian equity markets, with China outperforming while other benchmark indices sputtered. Trying to call the point of peak contagion, and thereby the peak of economic disruption, is tough, though the consensus seems to be that it will happen in March or April, aided by the arrival of warmer weather in the northern hemisphere (although scientists aren’t exactly sure if warm weather will have the same quelling effect as it does on flu and cold viruses).Japan’s Q4 GDP data, released on Monday, disappointed, showing a 1.6% q/q contraction versus the median forecast for -0.9%. Q3 data were also revised down, and the figures came amid expectations for a dismal current quarter performance given the impact of measures to contain the virus outbreak.There is a risk that USDJPY might sharply reverse gains should risk appetite in global markets deteriorate and sustain. Intraday meanwhile, momentum indicators continue their positive configuration, suggesting that despite the fact that the asset reached overbought territory there is still room to the upside. Stochastics slopes into overbought area and MACD extends above signal line suggesting strengthening of positive bias, whilst ATR posted a 16 pips move. Some correction could be seen ahead of US session, with immediate Support at 112.00 and 111.58 (yesterday’s peak), however the overall outlook remains positive. Resistance sits at 2019 peak , i.e. 112.38 and at 112.66 (R2 of the day).Always trade with strict risk management. Your capital is the single most important aspect of your trading business.Please note that times displayed based on local time zone and are from time of writing this report.Click HERE to access the full HotForex Economic calendar.Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!Click HERE to READ more Market news. Andria Pichidi Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Many traders are not so satisfied with IC Markets lately. It seems they have a lot of issues.
    • Potential GBP/USD long
    • White post on white forum paper $Value: Higher than 75
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.