Forex trading has become very popular recently. Unfortunately discussing the developing a winning Forex strategy is not so popular. Instead Forex trading is presented as a way to earn money quick.
If you are serious about this market, first thing you need is to realize that it is not a "get-rich-quick" scheme. There is a lot of things to learn to be successful in this market.
Here are some steps that can help you develop a winning Forex strategy:
Learn the basics. Do not rush through the process. There is really a LOT to learn. There are good resources online and offline that can help you with that.
Learn about yourself. What kind of trader are you? Are you a risk-tolerant person? Can you psychologically accept losing money? Are you a disciplined person? Can you follow your own tested strategy while in a losing period? These are some things you need to understand so you'll be able to develop a strategy that fits your profile.
Decide what timeframes you want to trade. This should be based on your risk profile and the amount of risk capital that you have.
Develop a strategy using a combination of different indicators. Incorporate money management and risk management techniques into your strategy; determine entry and exit points. Place all the indicators on your chart and visually evaluate how well the strategy is doing. If it does reasonably well, consider automated it through using the programming language of your trading platform. You can also outsource this part.
Now you need to backtest it. You need to run your strategy software (also known as expert advisor on the MT4 platform) several years back to see how it is performing. If it does relatively well, you need to test it in real time in a demo account. Do not take short cuts here. Trade in a demo account for as long as it takes till you feel comfortable to trade in real time.
This way you can develop a winning Forex trading strategy. Only after that open a real account with a small amount of capital, test your strategy in real time with the money you can afford to lose. Are you successful in real-time trading? Are you completely satisfied with your broker, trading platform, performance of your trading strategy in real time, the way you handle your emotions? If the answer is "yes", then you are ready to move more money into your trading account and trade bigger lots.
IndependentInvestor