Developing a forex trading strategy that is profitable is something which all traders aspire to design. Although it is important to remember that no strategy will give you winning trades 100% of the time, a good strategy will give forex traders a profitable edge in the markets which will be continuously profitable over time. With literally hundreds of methods of trading available, many successful traders usually design their own strategy after testing many of the methods which appeal to their own trading personality. This is also why it may be possible for one trader to use a particular forex system profitably and another to struggle to find success using exactly the same method. They key to this is the fact that some trading systems will suit different styles and types of traders.
Following your own trading preferences
One of the most successful ways to develop a trading strategy, or to try to adopt one of the thousands which already exist, is to follow your own preferences and interests. This creates an initial filter which will ensure that a method is developed from the start by personal preference and trading style. Preferences in forex trading range from the currency pairs that a trader chooses to study, to the types of indicators or price action set-ups that are appealing. Although this sounds fairly obvious, many new traders spend a lot of time trying to follow methods which simply is not suited to their future style of trading. Examples of this are trading uncomfortably low timeframes or using flashing indicators when your underlying preference has always been price-action candlestick and daily charts.
Social networking and forex trading
Some brokers have also allowed social networking to assist traders in finding a suitable trading strategy. Forex brokers such as eToro allows its clients to view and follow successful traders. Members can display their performance and profitability to other traders and, although many will not disclose their precise strategy, it provides a good way to follow experienced traders and to develop a trading method based on this. The software for these trading platforms even allows for automated trading for each and every trade of a followed trader. This method of automated trading is unlikely to help develop a trading strategy of your own, and it will tie you to the trading successes of another trader. Using a platform such as this, however, will allow traders who are looking to develop strategies based on price action to search and follow the success of likeminded traders and provide a valuable tool to developing an independent strategy.
Another perspective on forex trading strategies
Some of the most successful traders consider the strategy as one of the least important elements to successful trading and they may have a point. They put mush more emphasis on money management and, for example, the risk-to-reward ratio of each individual as the most important factor in successful trading. They also point to the psychological elements of trading and the ability for those with a forex trading strategy to develop their control over the two drivers of fear and greed which have a strong influence on all trading decisions.
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Risk Disclosure Notice: CFD’s can put your capital at risk if used in a speculative manner.