$__Forex Equals Money’s topic of the day is how to implement a successful strategy for currency trading that will result in success.
$__If you ever visit any of the many online forex forums, you will see that most every beginner trader is hoping to find some miracle currency trading strategy that will make them rich overnight.
$__In their desperate search to make money fast, newbies tend to believe that every new strategy they encounter is the one that will make them a millionaire, so they immediately ditch whatever they were doing to follow the next new system.
$__They never learn to apply any system profitably or even sort out the good systems from the bad. Inevitably they finish up by taking a loss.
$__That, of course, is a surefire recipe for failure. So let’s take another look and see if we can construct a recipe for success.
$__First, the reality is that there is no perfect forex system, no set of instructions to follow that will guarantee you make millions.
$__What works in practice is sound analysis that enables you to spot a trend and then open an order to back it.
$__This is very different from trying to predict the market. If you trade on predictions you are effectively gambling on which way the market will jump.
$__If you follow trends, you are waiting until a movement is clearly established before opening an order.
$__Of course you need to be sure that it is a solid trend and not just a momentary fluctuation that will soon go the other way. That is where the analysis comes in.
$__Use indicators to give you a clear idea of whether the market is oversold or overbought so that when you see a movement in the right direction you can be fairly sure it will continue that way for long enough for you to profit from it.
$__This is the first step in setting up your successful currency trading strategy – identifying the emerging trend. It is something that will become easier with experience.
$__In order to minimize your losses, you probably want to gain that experience in a demo account.
$__The next step needs to be taken as soon as you have entered the market, and it involves setting up a stop order.
$__This is an order that will be triggered if the price goes against you and it prevents you taking a large loss.
$__Never hang on to a losing order hoping that the movement will reverse. It probably will not, and you could be wiped out waiting. So get out, then take a good look at what went wrong.
$__You should be glad to have losses like this in the beginning because you can learn a lot more from a mistake than from a winning trade.
$__Where to set your stop can vary according to your system and the risk that you are prepared to take, but 10% is a good working figure to start with. If you find that your stop is being triggered too often, move it out.
$__Equally if you find that a shorter stop would have saved you money almost every time without being triggered by random fluctuations, you can move it in a little.
$__Does that sound too simple? Remember, the secret is not in the strategy itself but in how you implement it.
$__That’s why it is pointless to hop from system to system.
$__Develop your trading techniques and discipline, and you will soon be in a position to see that a successful currency trading strategy is very simple indeed.
