Discipline is the most vital behavior to be nurtured for successful trading activities. To enforce discipline, it is necessary to plan a strategy and stringently stick to it. You can take help from a platform that has information on the matter like Vortex Assets, which is a popular MT4 trading platform but provides Forex education resources.
Why you need a trading strategy?
Earning money from Forex trade is not bad, but how to manage actually counts. Risks accompanies every aspect of life, but it is necessary to be cautious and attentive. Even in Forex trades, investors need to monitor, manage and mitigate the risks.
Back-testing a strategy on related historical data for viability, before you take risks is wise. A back-tested, well-planned strategy builds confidence in using a successful Fx trading strategy. Vortex Assets help traders to back-test a strategy, which helps them to follow the plan easily, strictly and confidently.
How to pick a Fx strategy?
A strategy that is best for one can be a failure for you. Actually, the best one is that suits a trader’s personality, so plan one, accordingly. Therefore, experimentation is needed to seek the best one that works. Thus, you can narrow down the strategies that are not ideal for you.
Aspects to consider and find your trading style
Timeframe
Several popular short term timeframes –
Scalping – Scalping trades last for few minutes, where a scalper quickly seeks to beat the offer/bid spread and grab a little profit, before closing. They make use of tick charts.
Day trade – These trades get exited, before day ends. Therefore the impacts of large moves overnight get averted. Trades last for few hours only and charts get set for a couple of minutes.
Swing trade – Position are held for some days. Swing trader makes use of bar charts. They look for profits from price patterns set for half an hour or an hour.
Positional trade – A long term trader studies the end of day chart to look for long term trend. They seek to increase their profit margins from the major price shifts.
Price patterns
Price pattern plays a vital role in planning FX trading strategy. Technical analysis helps to recognize and exploit the price pattern.
Two technical styles in FX trading
- Trend following system look to earn from the breakdown of support and resistance levels
- Counter-trend system look to sell with new high and purchase with new low
For price patterns the most vital concepts applied are support and resistance.
- Support is markets tendency to move high from previous low
- Resistance is markets tendency to drop down from previous high
Price patterns tend to go high and low because traders are inclined to judge the subsequent price against current highs and lows.
- When market moves towards current low, buyers get attracted because they find it cheap
- When market progresses towards recent high, sellers get attracted because they find it to be a position for locking profit
Vortex Assets is a trading platform that has honed many traders. Its interface is user-friendly, so first timers can feel comfortably trade despite the volatility and complexity of FX market.