A strategy is a specific set of conditions which outline when you will enter and exit the market. It allows you to objectively see trading opportunities, and also see how trades would have worked out in the past. While past performance isn't always indicative of future performance, it does give you a baseline for assessing whether your strategy is capable of producing a profit.
Since markets range--move sideways--or trend--move up or down for sustained periods--you only need one strategy that works in both, or one strategy for each type of market. There is little need for trying to utilize many strategies.
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Become good at one and it will serve you much better than trading a whole bunch of strategies poorly. That's the real reason behind only using one strategy when you start out--by only focusing on one you get very good at it. The only way to get good at something is to do it over and over again in all types of market conditions. One month of practicing a strategy in a demo account will do much more for your trading than trying to absorb as much trading knowledge as you can. The former is helping you actually implement a method that makes money, the latter is just making you book smart.
And we all know there is a difference between knowing something and actually being able to do it.
How to Create A Profitable Forex Strategy From Scratch
You'll know your strategy inside and out because you have practiced and studied it so much. If you do that you'll avoid a lot of problems many traders face. You won't hesitate to make a trade no trading anxiety , and you will get in and out at the proper times no massive losses or being stressed because you don't know what to do.
Become an expert in one method. Until you're able to flawlessly--well, nearly flawlessly because none of us are perfect--execute a strategy for about six months in a row don't even consider learning anything new.
Create hundreds of new systematic trading strategies at the click of a button.
Stick to that one strategy. Being a master at one strategy that makes money is much better than knowing lots of strategies you don't know how to implement and make money with. When you start your trading journey read the basics on the market you want to trade--these include order types , capital requirements, legal and tax information, position sizing and market hours. Then find one or two sources that provide strategies on the time frame, market and time of day you want to trade.
Open a demo account and start practicing one of the strategies. Stick with it and don't get distracted by all the other information out there. No matter what strategy you pick you will probably lose money at first.
Traders, Master One Strategy Before Learning Others
Trading is a hard business, but that's why you are going to become a master at implementing that one strategy. Most were failures and some were successful.
From my experience, traders making money in Forex will not reveal their trading system, simply because somebody has to lose money in order for you to make money. Currently I have two strategies working for me. I started with a demo account a little more than one year ago and used the obvious techniques such as technical analysis and fundamentals. Technical analysis seemed to be the easiest method for an inexperienced trader since it only required looking at charts as opposed to watching the news. Needless to say I was successful in my demo account, however when I went live, fear set in and I could not trade using the same techniques I had developed over 4 months of trading with a demo account.
The stress was too much and like a lot of people, I started looking for a Forex signals provider to minimize the time spent and stress. After some due diligence on quite a few Forex signals providers, I did find a reliable Forex charting software package that provided excellent signals.
Choose Your Trading Methodology
To my surprise, the signals worked. The only difficult part was to discipline myself to take each signal whether I agreed with it or not.
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After all, the company I chose had a winning track record for 3 consecutive years. Now that I had a positive flow of income from a Forex signals provider, I decided to open a second account using my own trading system.
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This is where I discovered what I feel is a full proof system when it comes to making a fast 30 to 50 pips in Forex. Trading now for a little more than 1 year, I noticed that the market moved on speculation. Speculation based on fear and news events, such as the CPI and retail sales. I noticed that between the times of am eastern and am there was a lot of critical news in majors such as the Euro and the British Pound.