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Profitable Forex Trading Strategy Components

Discussion in 'Forex Discussions' started by painofhell, Feb 12, 2016.

  1. painofhell

    painofhell Content Contributor

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    Profitable Forex Trading Strategy – The Components.
    Most winning forex trading strategies have a set of components that differentiate these trading methods from the mere ordinaries. It’s done by maximizing profits and mitigating losses. Importantly, these increasing their overall footprint in the Forex trading market. Some of the main components you should use in order to get a good and profitable Forex trading strategy are listed here below.

    Price Pivot Areas.

    Pivot Point Areas refer to the areas where the market trend may change its current course. You can use some common trading tools to determine these levels. such as support/resistance levels. Or you can use different oscillators and indicators.

    Momentum.

    A profitable forex trading strategy usually includes momentum indicators. These have the capability to measure the trends’ strength. Traders can anticipate whether the movement is going to hold or break by gauging the trend’s momentum into potential pivot point areas. There are many technical indicators and you should use the ones that you feel the most comfortable with and works for you. Here you can Learn How to identify a Forex trend.

    Multiple Time Frames.

    In order to identify short-term and long-term movements more accurately, traders may use multiple time-frames while trading in a single market. The main chart is typically used to arrange the initial setups. Whereas another smaller chart is used to find exact entry points and recognize short-term momentum. If you like placing your trades in a 15M chart, start with the daily chart. Then move on to the 1H chart. Only then, and after analyzing the overall direction, go to the 15 minute chart to find the best timing.

    Dynamic Profit Targets.

    Professional traders, instead of using pre-determined or automatic profit targets, utilize dynamic profit targets. This not only enable them to measure a trade’s initial profit potential, but also let them take profit prior to or beyond that initial target. Depends on the real-time Forex market movements. So if you want a profitable forex trading strategy you must use dynamic profit targets. Your stop levels should be less flexible and predetermined by your technical analysis and risk management rules. However, when i say dynamic i don’t mean closing a winning position before it reached its target. By doing so you will ruin your pre-determined risk reward ratio. Remember – losses you can stop quickly. But let your winning position run! It will pay in the long run.

    Entry Strategy.

    A structured entry strategy is a vital component of a successful strategy. Meaning a set of rules that suggests where to place entry and stop orders. It leaves the guesses and decisions based on emotions out of the picture. When you find a good entry strategy stick to it with self-discipline. You must always look for a low risk entry that will maximize your returns. You don’t have to hold the best entry strategy in the world. Remember, an OK method is usually better than trading with no strategy at all.

    High Probability Trade Setups.

    Well-defined and repeatable patterns help traders to win more and lose less. Therefore, to have a profitable Forex trading strategy. These setups, combined with the preceding five components, define a rules-based, structured forex strategy. That helps traders to achieve what they desire. Turning them into the most successful fx traders. Enter only the trades that generates the highest probabilities for a win.

    You should note that a few other components are also highly important. Components such as proper money and risk management methods.If you find a strategy that includes all these components, just be consistent with it. You don’t need anything more than that. You’ll have a winning method and can become a successful Forex trader over time. Don’t try to improve what seems to work well. Many times, you will just damage your performance and complicate it with no real reason.
     
  2. sininfinity

    sininfinity Active Member

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    Nice article. But a trader should not focus only on these things. There are many other things that a trader needs to learn and apply to his or her trading so at the end he or she can take profit out of the market.
     
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