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Forex Trading Strategies explained: Why do traders need Forex trading strategies?

By Edited Jul 6, 2016 1 2

Forex trading has become quite popular in investing community in recent years. Internet is full of material on the topic. There have been created thousands of pages on Forex robots, software, courses, strategies, systems. This fact should not surprise us as Forex Exchange market is much bigger than US and UK's stock markets combined. With a daily turnover of about 2 trillion dollars Forex is the biggest financial market in the world today. This creates big opportunities for an average trader as he/she could easily participate in it and make consistent profits. But what is necessary to be successful in fx trading? I am not a believer of one step formula or what traders call it a "holy grail". I think there are a number of factors which makes trading profitable. One of them is acquiring a proper strategy and applying it with discipline.

1. Forex trading strategies provide a trader with a direction and a plan for his trades. Any trader before he starts a trading career or even before he sits down to his computer and places an order on his online Forex platform should have a definite plan how he is going to trade. Without a plan a trader starts trading spontaneously, jumping from one trade to another changing strategies and finally messing up by losing his capital, confidence in his ability to trade and possibly desire to continue trading.

2. They provide you with a clear understanding what you should do and what you should not do. Markets change, they are never in the same conditions for too long. Each specific period requires a specific strategy. One does not wear winter shoes during summer, likewise in a range one does not use trend trading strategies. A real professional has one specific strategy for specific conditions the market is in at a given period of time. He also selects different trading tools for each period: indicators, time frames, frequency of trades, stop loss and take profit ratio and many more.

3. Forex trading strategies help you find out flaws in your trading. Strategies are not perfect as we human beings are not. An imperfect human cannot create a perfect system. However, we should try to perfect our trading and consequently our trading strategies. As we trade longer we start seeing some problems, inconsistencies of our strategies. So we make corrections. Now we have a better strategy. After some time we notice other things that makes our trading systems less efficient than they could be. So we make necessary readjustments again. Finally we have a product that is close to perfection and gives us stable profit.

So, these are the main points which underline the importance of Forex trading strategies. We must always remember that there is no one perfect flawless trading system that could store us fortunes in no time. Everything in life and in trading comes with time. Only practice and a lot of practice make our trading 'perfect'. If you want to find out more how to implement forex trading strategies I suggest you watching my video about forex signals.

And one final note: "Forex trading involves risk of losing more than you can afford, therefore you should adopt a sound money management scheme and use it properly". Good luck in trading.



Sep 22, 2010 6:06pm
Very nice article. Thanks for sharing the info
Sep 22, 2010 6:10pm
Always welcome.
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