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Wednesday, 18 January 2012

4 ways to a good and reliable trading strategy

If you aspire to become highly successful in making money buying and selling in the foreign exchange market, you must have a sound risk management strategy which means you must know when and where to apply your stop loss. Your character will determine the way you trade. A strategy will enable you to make the right choices at the right timing that will allows you to buy, sell, long or short  foreign currencies in almost any currency exchange market in the world. This is a business that you can make money online

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Before you decide to embark on your journey to get involve in foreign exchange trading or forex in short. You do need to know that the foreign exchange market is a global, worldwide-decentralized financial market for trading currencies. This business is a continuous operation: 24 hours a day except weekends. According to the Bank for International Settlements, as of April 2010, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily volume as of April 2007.
We came up with 4 strategies that may come in helpful for you to fine tune and make your own trading strategies more robust.
1)      Sustainability
In the world of trading whether it is stock or foreign exchange trading, there is no sure win strategy. What you want is to ensure consistency winnings in your trades. In order to sustain your stay in this business, you need to make enough money to stay in the trade for the long term. Your strategy to stay in the foreign exchange business for long term is make money from your trades regularly.

2)      Emulate the success of others
Join a forum or club and build your knowledge by discussing with more experience traders. Ask questions and find out their winning strategies. This whole exercise is to emulate, adopt and develop your own winning strategy because characters varies among people and so does trading. This will save you the time and painful lesson.

3)      Profit / Loss ratio
What you want here is to have a profit ratio greater than one otherwise you are either losing money or wasting your time. If you have more losing trades than winning, the strategy that you are using is obviously not suitable for you. Either you revise your trading strategy or your revise the way you trade.

4)      Time zone
Since the currency market is traded globally, you can find traders from around the world at different time zones. An effective trading strategy is highly dependent on the timing. Timing is considered to be among the most significant aspects of an effective trader.

Although foreign exchange trading can be a terrific way to earn money in the shortest time, it can however is also make you lose your shirt fast. Choose the right strategy and develop an effective trading technique is the way to build a business around foreign exchange.

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