Building Your Forex Trading Strategy
A Forex Trading strategy, if properly developed and followed will allow you to survive and make progress in the Forex market. Without a strategy, you will be at the mercy of the next exciting story or chasing a breakout (which can turn out to be a trap.) This article will walk you through the key components and benefits of a Forex specific trading strategy.
One of the best analogies I heard to trading was to imagine yourself as a hunter who lived at a secluded cabin in the woods.
The hunter knew they would only be able to eat what they killed and that many of the animals were dangerous so they needed to plan their attack with precision. The precise plan involved them only exiting their cabin when they a wounded animal passed nearby so they could leave the cabin, kill their prey, and take it back for food without too much risk on their part.
The connection of the hunter in the woods to trading is important. You should always be looking for the best set-ups, which are never guaranteed to produce a profit, but are opportunities with controlled risk. Continuing with the analogy, a trader without a system is like a hunter without a cabin, always exposed to attack and likely trying to hunt animals that outmatch him and thereby present a negatively skewed risk.
So how do you develop a strategy that keeps your risk minimal while allowing you to trade the Forex Market? You need to identify a handful of key trading aspects that suit your skill-set best. As a trader without a plan that you find satisfactory, you should start with this L.O.U.D plan
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