Strategies and systems for trading the forex market are a part of the forex trading business that has come to stay right from the onset of it and will continue to be so. It is one of the first things new traders come in contact with even before they are able to place their first trade; be it on the demo trading platform, or on a live account. A bad forex strategy or system will result to bad business; that is losses. As such, it is important that traders put in their best to make sure their strategies and systems are top notch at all times while trading.
A forex strategy is a compulsory game plan that guides a trader through a forex transaction. It starts with
- What market condition to trade
- When to enter the trade
- When to exit
- Tools to use
- Currency pair to trade
- Time frame
- Risk management plans
On the other hand, a forex system is a collection of all that a forex strategy consists and more. In addition to what a typical forex strategy has to offer, a forex system offers more of the following
- Other strategies for diverse market conditions
THE PROBLEM TRADERS HAVE WITH THEIR STRATEGIES AND SYSTEMS
A strategy is very important in trading the forex market, but in most cases, it is not easy to find one. This is not to say that there are not enough of them in the forex market; in fact, the opposite is the case; there are many strategies and trading systems available that traders are confuses as to which one really works. These strategies are usually developed by other forex traders/analysts, and they sell them out for other to make use of. A trader can also develop his or her own strategy/system to trade with, and can share it with the public voluntarily. This level of liberty that comes with trading the forex market and creation of strategies and systems at will is one of the reasons there are a lot of them in the market and many are confused as to which to trade with.
WHY TRADERS MUST CONSIDER PERSONALITY WHEN CHOSING STRATEGIES AND SYSTEMS FOR TRADING THE FOREX MARKET
The very first thing to consider when looking for a strategy is the trader’s personality. Some strategies and systems are designed for certain market conditions that do not necessarily appeal to some traders. For instance, a trader that is not fast enough to enter and exit the market in few minutes, with full attentiveness to every detail of the trade, cannot do well as a day trader with a time frame of about a minute or so. Such trader should know well than to trade with a system/strategy solely designed for trending markets.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.