Forex Trading strategy comprises of set of analysis that forex traders use to evaluate whether to buy or sell a currency pair at any given time. These strategies can be based on speculation, chart analysis, technical analysis or several fundamental and news based events. Many forex trading strategies are available all over the internet. Though multiple strategies are available online, it is best to craft your own strategies after obtaining a thorough knowledge about Forex in order to succeed trading in the field.
Forex trading strategies consist of a number of manual or automated methods that are necessary for generating trading signals. Manual systems were used before the advent of internet. Even though they are still in use, their usage has drastically reduced. In manual method, a trader sits in front of a computer screen and looks for various trading signals based on his or her experience which can help him to interpret whether to buy or sell a particular currency pair. He later on conveys this information to an individual trader who upon getting profits, provides a certain commission to the broker .Automated systems are basically those in which experienced traders develop algorithms which can help a lot of people to obtain trading signals. Traders should refrain from following the strategies that are listed online without having information about the source because most of the times, genuine forex trading strategies are kept a secret.
Some of the components that can help individual traders to craft a forex trading strategy are
Market selection – Traders should try to become experts after selecting the currency pairs that they want to trade. This can help them in taking better decisions in the Forex market.
Position Sizing – Traders should determine how large each position is to control the amount of risk taken in every individual trade.
Entry Points – Individual traders should develop their own set of rules or strategies and abide by it when entering a long or short position for a given currency pair during the course of forex trading.
Exit Points – Traders should understand and think well before exiting a long or short position .They should also have a fair idea as to when to get out of a losing position.
Programs like Metatrader are available online where traders can develop trading systems which can help them to follow rules better as their entire set of rules get automated in this software program. They should also use paper trading and other strategies to become a successful forex trader.