7 Best Forex Trading Strategies for a Successful Trader

forex-strategies

Forex trading may be all about charts and numbers, but for all the statistical analysis involved it is more an art than a science. It starts with talent and ends with self discipline and self analysis. A good Forex trader can make a profit in a day, but a great trader can make a profit every day.

Here you will learn to keep fear and greed out of your equations and perfect the subtle art of trading. Whether you're a beginner or a veteran, you may find some best forex trading strategies.


Strategy No. 1. Determine your goals and choose your trading style.

As with any journey, you must have a clear destination before you begin. It is important that you decide what you want to accomplish with trading. What style of trading you choose determines what type of goals you can achieve. There are many trading styles to choose from, so make sure your choice is compatible with both your goals and your personality.

If you cannot stand to have an open position on the market overnight, perhaps Day Trading is best for you. Or, if you wish to try and benefit from appreciation over some months, Position Trading would work better for you. Whatever you choose, be sure it matches your goals and you will be bound for success.


Strategy No. 2. Finding a Suitable Forex Broker.

Selecting a suitable forex broker is important, they must offer a platform that allows you to perform the analysis your style of trading requires. If you want to trade off of Fibonacci numbers, make sure your broker can draw Fibonacci lines. Know your forex broker's policies. Choose a reputable broker by researching the difference between each one. It is always helpful to know which brokers can do what before deciding which to use.

Be sure to read their documentation and know how each makes a market. Trading in the exchange-driven market is not like trading in the over-the-counter market. Using a good reputable broker with a bad platform is just as bad as having a bad broker with an excellent platform. Make sure both are in harmony and you will have taken your next step towards successful forex trading.


Strategy No. 3. Choose a methodology and a time frame.

Be adaptive. No market is set in stone, make sure you know how you will make decisions and execute trades. What key information will you need and how will you decide when to enter or exit a trade? Many forex traders use some mixture of fundamental analysis of companies or markets combined with technical analysis of charts to determine when to enter and exit.

Remember fundamentals drive trends in the long term, while charts show trends in the short term. Make sure to keep in mind the time frame of the charts you use. There often appears to be contradictory information in charts over different time frames. Sometimes a buying opportunity on a Weekly Chart will appear as a selling opportunity on a daily one. Keep your time frames straight. No matter what method you decide upon, stay consistent. A patient trader is a successful forex trader.


Strategy No. 4. Calculate your expectancy.

The reliability of the system you use can be determined through the expectancy formula. This formula takes all your trade wins and trade losses and shows you exactly what your profits or losses are over a set period. Here is the formula:

E= [1+ (W/L)] x P - 1

where: 
W = Average Winning Trade 
L = Average Losing Trade 
P = Percentage Win Ratio

A great way to use this formula is before you start actually risking money on the market. Look at the charts for where your system would have you enter and exit a trade for 10 consecutive trades. Write down the results and see if you made a profit or loss. Then average your winning trades, average your losing trades and plug them into the formula. If you have a positive Percentage Win Ratio, then your system is profitable. Congratulations!


Strategy No. 5. Focus on your trades. Small losses are good losses.

Always remember, once your money is in a trade account it is at risk. This is not money that you can rely on to pay bills or buy food. This money might as well be gone. If you can treat the money you risk as already being spent it will let you relax and prepare for small losses. Accept these small losses and focus on the next trade.

Do not constantly count your equity and you will have great success. A good rule of thumb is to never leverage more than 2% of your total funds. If your stop-losses are farther away than 2%, change your time frame or decrease your leverage.


Strategy No. 6. Positive feedback and weekend analysis.

The weekend is the perfect time to take stock of your situation. Study your charts and listen to the Mentors. Take everything they say with a grain of salt, though. The Mentors are forex traders too and they may make a profit off convincing you to take a loss. Stay objective and plan carefully.

Patience is your best weapon. It may take longer than you expect, but opportunities are always around the corner. Remember, even if you take a loss, if it is all part of the plan you will create a positive feedback loop. Positive feedback will give you confidence in the market and success will create more success. A trade that is planned and executed perfectly at a loss can be more rewarding than a sloppy trade that profits. Build confidence in your trading plans and success will come to you.


Strategy No. 7. Make a printed record.

Printed records are excellent learning tools. Print out your charts and analyze every aspect of a trade. Do this with enough trades and you will a stockpile of trades to refer to. This will help you stay objective in future trades.

Perhaps you panicked on a trade or got greedy. Store these trades as lessons in discipline and self control. Soon enough you will be trading like a seasoned pro and your printed records could be key in helping you remember to keep your cool and trade effectively.


Finally

These forex strategies are only the beginning to your trading career. Remember it is as much an art as a science and hard work makes hard trades become easy. Self-control, patience and structure will keep you objective and trading with ruthless efficiency. Finally, the more effort you put forth the greater your rewards will be.


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