Currency trading can’t be consistently profitable without adhering to some Forex strategy. It takes time and effort to build your own Currency trading strategy or to adapt an existing one to your trading needs and style. It’s important to choose a strategy or system that is easy to follow with your daily trading schedule and that can be applied successfully with your account balance size.
Indicators are used for identifying patterns from all the ups and downs of the forex market. In any case, indicators get the raw market data feed, and spit out probable trading scenarios. Just remember that they are not instruments for predicting the forex market. We use them to possibly identify opportunities which we could use to our advantage. The indicators must be used with an appropriate money management strategy (which is probably the most important thing in forex trading on margin).
When developing a trading system a trader should focus on market behavior and market movement in particular. For this purpose we need to understand inner organization and life cycle of trend. Trader’s behavior and, as a result, price movement should be taken into consideration. Based on this, we can make a conclusion that markets consist of three trends. The first trend, the most continuous one, can last for several months and should be used to determine market direction for opening positions. The second trend is correction lasting for several days and determined by more sensitive indicators. The third market movement looks like a sideways trend between correction and main trend extension. This is the shortest trend continuing for one or two days.
One of the major factors that should be taken into consideration is investment of psychological and financial resources.
First, the ability of a trader to control his/her behavior and emotions has significant influence on the successfulness of trading and frequency of traded deals. A trading system employed by a trader does not become an independent program after a start; its work can be interrupted anytime at the trader’s will. Thus, the trading system must suit the temper of the trader using it.
When trading goes in the estimated direction a trader should choose between getting quick but sure profit and further trading with hopes of larger profit. What should one do in this situation? One option supposes using trailing stop signals, another one suggests taking advantage of oscillators capable of predicting corrections and reversals of the trend.