“If you fail to plan, you are planning to fail.”-Benjamin Franklin
No matter what you will be a lose trader if you don’t have a solid trading plan! It is irrelevant how much you know about Forex trading. You can’t just jump on every possible trade and make profit from it. Your luck won’t favor you every time.
You must have to separate the Forex trading from gambling. Gambling is the thing where you relay on fate but Forex trade is like an investment. Where you invest your money once you analyze your risk and success probabilities like any other businesses.
The course of general investment environment doesn’t change rapidly as Forex market does! So, you must need a solid trading plan for your Forex investment which will cover everything that needed for a successful trading plan as:
[mks_icon icon=”fa-star” color=”#0762a2″ type=”fa”] What would be your criteria to consider a probable trade and Where you are going to close that trade and Why?
[mks_icon icon=”fa-star” color=”#0762a2″ type=”fa”] What would you do if the trade goes against your expectation even if you took every precaution?
[mks_icon icon=”fa-star” color=”#0762a2″ type=”fa”] How much you are going to risk against your probable profit? What are the scenario of your risk and reward ratio?
[mks_icon icon=”fa-star” color=”#0762a2″ type=”fa”] Are you risking too much than your probable gaining?
So, you must need a good trading strategy which will save you from great loss and secure your trading balance which is your primary objective as a Forex trader.
And the primary objective of a great Forex trading strategy should be minimizing the risk by filtering the trades; not profit maximizing! It will be focused on consistent profit not overnight gaining. You can still make money if you lose 7 trades and win only 3 if their reward ratios are good enough!
[mks_pullquote align=”right” width=”350″ size=”18″ bg_color=”#ffffff” txt_color=”#0762a2″]You will make more than 20% a month from 6-10 trades with almost risk free![/mks_pullquote]
My core price action course design based on price behavior of the Forex market and minimizing the risk from 100% to 5% by filtering them!
Now let’s talk about the ‘Core Elements’ of a good Forex Strategy:
Level 1: Entry
It must tell you how to filter a trade and where to trigger the entry if certain logical criteria meets and before the entry it must tell you where to out!
Level 2: Risk & Reward
How much money you are going to risk and how much money you are going to win from a trade? Your strategy must filter a trade by risk and reward ratio before triggering it.
If you are risking more than the probable profit like, risking $100 to make $50 then just go to gambling sites, you simply do not belong here!
Level 3: Money Management
(The only reason 90% trader lose money!)
To be honest, Money management should be in the first lesson in a trader’s book. 90% trader lose money because of it not they don’t know how to trade! You heard it right, they know how to trade even they win 70% of their trades and they still lose their account! How shocking is that (a FXCM client survey)! Sweet talking and emotional honeymoon dreaming won’t help you long.
Volume/Lot Size/Leverage is only enemy if you are not yet a successful trader! Leverage count when you use it to open a trade not when you open an account. It doesn’t matter if you open a live account with :100 or :500 leverage only matters when you use it.
Double Risking is another one. If you are trading on single currency strength/weakness you must ignore co-related currency pairs. Such like if you trade EURUSD ignor USDCHF , don’t trade AUDUSD and NZDUSD both if you are relying on Dollar! There is a whole session how to ignore double risking in my price action course. Sign-up here.
If your strategy does not tell you how to manage your trading volumes and entries you must through it away! You would never be a profitable trader by following it. Sooner you leave is better for you.
Level 4: Trading Phycology
(How to keep your profit)
Your strategy must tell you how to keep your profit intact that you earned by successful trading decisions. Most of traders lose the profit as soon as they earned it to the next trade!
That is human phycology, You can feel jolly good after 9 successful trades where you made $900, but you can open next trade with large size/volume as you are in a profit mood and you can hit stop loss and lose $1500!
So, Even if you win 90% you still could be a lose trader! You must develop your trading phycology to follow proper money management and your strategy should help you with that.
Below I will share some other proven strategies from some of my trading friends (most of them are renown by their name and successful trading icon) which are different from my strategy. I recommend them if you are thirsty for more (which you should be)!