FOREX KNOWLEDGE

MAKING YOUR OWN PROFITABLE FOREX STRATEGY

Every trader needs a working forex strategy in order to succeed. There are countless forex strategies in the market, and you just need to find one that suits your trading style. Each strategy has its own advantages and disadvantages. We can’t really say which one is better than another. We can only tell if it’s suitable for you or not. So let’s learn how to find a profitable forex strategy for yourself.

Profitable forex strategy

A forex trader places Long or Short orders on currency pairs with the goal of making a profit. A forex trader needs strategy, discipline and market sensitivity at all times. Whether focusing on a technical or fundamental approach, or both, the trader seeks to build an understanding of the behavior of currency pairs and execute profitable trades.

In the 24-hour money market, trading never stops, meaning there will always be action, although forex liquidity levels will peak and bottom at certain points throughout the time. Some traders may want to be active during periods like midnight to take advantage of opportunities from international markets.

How to have a profitable forex strategy

So what does it take to master a profitable forex strategy? From having a passion for the market to being disciplined and more, these are the traits that will make you an effective forex trader.

Have passion

You must have a real interest – even passion – in whatever financial market you are going to trade.

When trading the forex market, you must have real interest and understanding of monetary policy, one of the main drivers of price action. For example, if you are trading GBP/USD, you need to follow and analyze the Bank of England and the US Federal Reserve’s policy moves and speeches – both of which drive markets. So aim to have the same central bankers as the central banker, but don’t bet on them – they have a lot of money and almost always win.

See the big picture

It is extremely important for traders to know that all currencies can be able to maneuver macro factors at any given point.

The Australian Dollar is a prime example of a currency that moves on a wide range of macro factors. It increases as the world economy grows, and decreases as the economy weakens. This is usually true for most currency pairs, but some can be different. Major commodity prices, Australia’s monetary policy outlook and political risk all can set it off against the general market.

Technical and fundamental analysis

Currency pairs are controlled by both sides of the equation.

When trading currencies, a trader needs to understand what’s going on in both related territories. For example, when trading GBP/USD you should stay up to date with the latest news about Brexit alongside the latest news about the US – China trade war. Overall, however, a good understanding of market trading is crucial, from stop losses to chart patterns; from market sentiment to the role of central banks.

Manage your money

You can have the best forex trading ideas in the world and still lose money if you cannot limit your losses and make a profit.

Money management is the main difference between the hobbyist and the professional trader. In a witty way, real data from a major forex broker shows their clients closed their EUR/USD trades with a 61% increase in the time and still lost money as winning trades earned an average of 48. pips while losing an average of 83 pips at a loss. That’s not the way to make money, and that’s exactly why money management is the one who makes the difference between a hobbyist and a successful professional.

Have discipline

Strong self-discipline is needed to follow the original trading scenario.

You must be self-employed, able to take responsibility and learn from your mistakes. A love for trading in the market, not simply making money. This is very important – it will help you get through the challenge. Strong self-discipline is needed to follow a clear plan, but is also flexible to adapt to changing circumstances as market conditions move.

Be confident

Courage is valued in almost every aspect of life.

Trading can be difficult. It was just as easy from an outsider’s perspective, as if simply pressing the Buy or Sell button. But it’s not easy to consistently beat the crowd, and almost anyone on the way, will sometimes face challenges. Courage is what allows you to overcome those challenges, and without courage, you will easily give up for any reason.

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