Tuesday, November 17, 2009

How To Build A Strong Trading Strategy????

  1. More than just one technical tool: a decent strategy should contain at least 2 different indicators, one of them is a leading indicator and the other one is a lagging one while 3 indicators will give you a more slower signal but it'll be a more stronger one.
  2. A fundamental rating measurement factor to measure the news effects: this would be a self-established one which can be discovered by testing the news effects on the FOREX market and measure it to establish a factor that suits the trader.
  3. The trading time frame: keep in mind that a scalper wouldn't wait to take confirmation from 2-3 indicators on a H1 chart, he is waiting usually for a tick up or down to enter his position, some other ticks and he is out.
  4. Your account equity: what ever your trading strategy or trade length, never put all the eggs in one basket, keep an open eye on your equity, not your balance.
  5. Risk factor: setup your daily risk ratio and never exceed it if you lost on a day, you'll never get back the money you lost by going emotional and try to achieve revenge. If you have to lose and you already lost the supposed risk ratio, stop trading at that day, have some rest then try to study that position and the mistake that did lead to that losing trade.
  6. Daily targeted profit: when you get your target achieved, take rest and save your efforts for studying the next day opportunities. If you are about continue trading, set a stop loss of no more than half the achieved profit and don't go so greedy.

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