This article looks at the creation of the best forex trading strategies for you.
Forex trading strategies are as diverse as the traders who use them. While there are a number of base forex trading strategies there are many other custom made ones. When you are looking for the ideal strategy you may have to customise one of the base strategies. There are a number of tips that you can use to make the ideal strategy for your trading.
Finding Your Base Forex Trading Strategies
The first thing you have to do when you find the ideal strategy is determine which base strategy you should be using. Base strategies are the forex trading strategies that you are told about during your training. These will include the different short, medium and long-term strategies that you can use. Some of the common strategies are scalping, positions and swing trading.
It is important that you determine which strategy you want to use. This strategy should work with your personality and your trading style. When you have this base strategy you can start customising it so it is the best strategy for you.
The Use of Indicators
One of the areas that you can customise with your trading strategy is the indicators that you use. You have to be careful when you do this because the indicators that you choose to use need to give you the information you need. There are a lot of traders who incorporate fundamental analysis into a technical strategy. This could be done because they like fundamental analysis or because they feel they will get a better view of the market this way.
If you are changing your technical indicators you should use the strategy on a demo account before live trading. This allows you to determine if the new indicators are providing you with the right information. There are certain indicators that you should not use with certain strategies. One of these is the Fibonacci retracement. This technical indicator should not be used with short-term trading.
Choosing the Right Currency Pairs
Some forex trading strategies have a certain currency pairs that they recommend. There are a few problems that you can face with this. The first is that you cannot trade at the right times. Another problem is that you cannot get the information for the pair or you do not understand everything that affects the currency. It is important that you understand all the drivers behind a currency pair.
This is possible one of the easiest areas of the strategy to customise. The first currency pairs that you should consider are the major currency pairs. It is easy to get information for these currencies and most brokers offer them. Of course, you can also look at some of the exotic or emerging currency pairs. However, when you do this you need to be aware of the problems you can face trading them and finding information for them.
When you look at a different currency pair you will need one that fits the criteria for your strategy. If you are using a range strategy for the base you need to use a currency pair that ranges. If you are looking at trending strategies then you need a currency pair that trends.