This is for Emmanuel and all those who emailed us yesterday, asking us how they can set up their own Forex trading strategy.
Let me start this way, trading forex is not easy and is not also complex. If you are lucky to have a good mentor early who genuinely share his skills with you and also give you some materials or video to watch, you will be among the top 10% of those currently enjoying the forex market. But if you are unlucky and meet those who are only interested in your money you will remain in the top 80% of the losers circle.
Three things are very important in the forex market, your skills, your psychology, and your Brooker. Your skills and psychology can be sharpened by your mentor, the two go together, skills without good psychology will lead to failure, so you need to develop these two things early.
Get tips from your mentor, read books on trading and mindset psychology, then start building your confidence from day one. As for number three, which is the Brooker, try as many of them with a demo account and study the spread very well. Read some of their reviews online before making your final decision. Let’s move on to how to build your forex strategy.
How to Build Your own Forex Trading Strategy.
1. Study and understand the forex market
Take the forex market as a real World Market where people go in, bargain, buy and sell different items. If you are going to a normal market to buy anything for instance, before living home, you would have drawn up a list of things you wish to buy at the market. Let’s say Rice, Pepper, Chicken, and tomatoes. Once you get to the market, you will walk from shop to shop to bargain and buy your listed item, any addition or subtraction will affect the overall balance. Once you finished getting your items, you will leave the market back to your home.
That’s exactly how to deal with the forex market. When you wake up, get a list of currency pairs or indices you want to trade, go through the market, read through history, find possible reversal points and write them down. Highlight some conditions, like Bollinger band cut, moving averages crosses, that will motivate you to enter the market. And be sure to discipline yourself not to enter the market if those conditions are not met. Then rest and wait for your trading session to begin.
2. Have a daily budget
Having a daily budget will help build your confidence. When I started trading forex my mentor gave me a benchmark of $10 daily from a $100 equity, I stick with it, I hit the target consistently for 3 weeks. I recorded some loses in-between but I kept pushing. One day, I develop a budget schedule and in the budget was: standard lot size, trading schedule, the amount I was to make daily and the amount I was to lose daily. The budget will help regulate how long you stay in the market.
3. Develop your trading Schedule
Set a time schedule for your trading session, don’t trade always. Personally, I use 30 minutes or more to analyze trade then place trades (Buy Limit, Sell Limit, Buy Stop and Sell Stop) and monitor the trades at intervals. I close all my trade at the end of the London Session for currency pairs, then before I sleep for Volatility indices.
4. Flee from Signal provider
If you want to be a good forex trader, make it your number one forex strategy or resolution not to depend on forex signals provider for your trading. I’m not saying they are not good. During my early days as a forex trader, I was introduced to two premium signal provider who told me that their signals were 99% accurate, I subscribed, pay up to $50 each for their premium services, even though I get back my initial investment, I became so dependent on them that they made me lose everything. Sometimes when they send signals, I will just place the trade based on the signal without looking at the market. One day, I placed some trades, check back hours later to see 00000 as my balance.
5. Develop a trading network
Develop a circle of friends who are forex traders and interact with them regularly. If possible create a group on Whatsapp, Telegram or any other social media platform to share ideas and analyze trade together. Personally, I have friends that I share a screenshot of my daily profit and loses with them for insight, analysis, and support.
6. Grow your equity
Forex trading is sweet with big equity. Discipline yourself and build your capital to a certain amount before your first withdrawal.