Forex trading system
A well-developed Forex trading system can significantly increase your chances of success. It's the foundation of professional trading, so it's crucial to develop a detailed action plan before starting trading.
The main points that must be included in the work plan are: analysis of the market situation, selection of the entry point, determination of tactical moments and points for closing transactions.
You should clearly outline all the stages of trading and then follow the plan you've already outlined. This will reduce the psychological pressure of the market and protect you from spontaneous decisions.
The Forex trading system is more understandable if it is studied using specific trading examples.
Before you create a plan, you should already decide what you will trade, when you will trade, and how much. Only after answering these three questions can you begin to build your trading system.
1. Forex market analysis – the following rule applies: the shorter the timeframe chosen for trading, the less time we spend on trend analysis.
Your task is to determine the trend direction, its strength, the range of fluctuations, and the nearest reversal points. Once the main parameters are determined, we move on to the next step.
It is advisable not to get carried away with complex analysis methods; for success, it is quite sufficient to identify a number of patterns, the discovery of which will suggest the direction of a future transaction.
2. Time frame - this can be selected in advance, but it is more practical to select the duration of the time frame based on the analysis data; you should not focus on just one time frame.
For example, if you believe that the trend is confidently moving upward throughout the day, then it makes sense to trade on M5 when you can get the maximum profit on H1.
3. Entry point – a trend line always represents a certain curve; the most successful entry points will be the points where the correction ends. Entering the market at these points will allow you to earn 5-30 pips more, depending on the duration of the trade and the current situation.
4. Opening an order – this action requires not only clicking the buy or sell button, but also setting stop orders – stop loss and take profit. First, set the stop loss order value, and then set the take profit; the latter value can always be adjusted upwards.
Positions should be opened only at the most promising moments, not when simply trying to make money. Each order should correspond to a specific market signal.
5. Maintaining the position – after the order is opened and all stops are set, you can relax, or you can try to increase your profit. To do this, you should monitor the trade throughout the entire period and, after entering the breakeven zone, begin gradually tightening the stop-loss order and moving the take-profit.
You can also use a trailing stop to increase efficiency, eliminating the need to manually move the stop loss to a more advantageous position.
6. Closing an order – usually occurs when stops are triggered, or at your initiative if you notice a trend reversal or news comes out that could trigger this event.
For short timeframes and when using high leverage, it is recommended to use " One-Click Trading " - this feature will allow you to close the transaction as quickly as possible.
7. Analyzing results is especially necessary when making losing trades and is a must when developing any Forex trading plan. When doing this, try to identify the reasons that caused the losses and avoid repeating the same mistakes in the future.
One of the components on the basis of which the system is compiled is the trading strategy. It is the basis for all key points, therefore, before starting work, you should first choose the most effective Forex strategy .
