Every single successful trader says the same thing - to win at forex, you need a strategy. And truly winning at forex means much more than the latest robot that works for a few months then blows your account, true winning means making profits for years, taking losses sometimes of course, but year in, year out making consistent, reliable profits from the colossal finance market. So how can a budding trader benefit from a solid currency trading strategy?
The first thing to understand about forex strategies is that everyone trades them differently. Many new traders believe that a forex system will provide iron-clad rules which, by simply following them or even programming them, will guarantee wealth in a miraculously short timeframe. The reality is that if you backtest and trade even the very best forex strategies, they will almost always make at best a marginal profit. The endless crossing lines, averages, and technical wizardry of the hottest new indicators rarely bring longterm profits, and yet every profitable trader insists a strategy will make you win.
So why the need for a strategy? This is because there is an inherent irony involved in trading a forex system which everyone must eventually learn. If you give exactly the same rules to multiple different traders, and then have each trader keep those rules to the letter - everyone will still have completely different trading results. An experienced trader with thousands of hours of chart-reading experience will get good results from a mediocre strategy, yet a rookie trader with a great strategy may find success much more difficult. The main and all-important purpose of a forex strategy is not to create a magic system which instantly makes huge profits, rather it is to create a psychological framework to counteract the twin enemies of a forex trader, hope and fear.
Every successful trader is successful not because they have beat the market so much, but because they have beat themselves. Trading with emotion will ruin your profits, and the best way to beat that emotion is to have a rule-based, logical framework that overrides counter-productive emotional instinct. Strategy rules provide clear exit conditions to keep losing trades small and entry rules to identify high probability entry points with clear profit and loss targets. The seasoned trader will often not take every trade that their system provides, but rather within the possible trades offered by their system will then wait for the ones which, based on their experience and judgement, have the highest possible probability of winning.
In this way the you can eliminate emotion, defines clear entry, exit, profit and loss rules, utilizes their experience to cherry-pick the very best trades - and consistently makes money.
The arrival of different forex trading schemes makes the business very complicated today. That is why you should be able to develop a currency trading technique that is simply effective.
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