Forex trading system
A clearly developed Forex trading system allows you to increase your chances of success several times; it is the basis of professional trading, which is why it is so important to draw up 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 an entry point, determination of tactical points and points for closing transactions.
You should clearly describe all stages of trading and then follow the already outlined plan; 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 drawing up a plan, you must already decide for yourself what you will trade, when you will trade and with what volume; only after answering these three questions do we begin to build our trading system.
1. Analysis of the situation on the Forex market - the following rule applies here - the shorter the duration of the time frame chosen for trading, the less time we spend on trend analysis.
Your task is to determine the direction of the trend, its strength, range of fluctuations and the nearest turning points. Once the main parameters have been determined, we move on to the next stage.
It is advisable not to get carried away with complex methods of analysis; for success, it is enough to identify a number of patterns, the detection of which will tell you the direction of a future transaction.
2. Time period - it can be selected in advance, but it is more practical to choose the duration of the time frame based on the analysis data; you should not focus on only 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 maximum profit on H1.
3. Entry point - a trend line always represents a certain curve, the most successful entry points will be the places where the correction ends; entering the market at these points will allow you to earn 5-30 points more, depending on the duration of the transaction and the current situation.
4. Opening an order - with this action you need not just click the mouse on the buy or sell button, but also set the value of the stop orders - stop loss and take profit, first set the value of the stop loss order, and only then set the take profit, the value of the latter You can always adjust it upward.
Positions should be opened only at the most promising moments, and not when you just want to make money. Each order must correspond to a specific market signal.
5. Maintaining the position - after the order is open and all the stops are set, you can relax, or you can try to increase your profit. To do this, you should monitor the transaction throughout the entire period and after entering the no-loss zone, begin to gradually tighten the stop loss order and push back the take. profit
Trailing stops can also be used to increase efficiency, eliminating the need to manually move the stop loss to a more advantageous position.
6. Closing an order - usually done when stops are triggered, or on your initiative, if you notice a trend reversal or news has come out that could trigger this event.
For short time periods and when using high leverage, it is recommended to use “ One-click trading ”; this function will allow you to close the deal as quickly as possible.
7. Analysis of results - especially necessary when carrying out unprofitable transactions, and is mandatory when drawing up any Forex trading scheme. When conducting it, try to find the reasons that caused the losses and not repeat your mistakes in the future.
One of the components on the basis of which the system is compiled is a trading strategy; it is the basis of all the key points, so before you start working, you should first choose the most effective Forex strategy .