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Creating Your Own Forex Day Trading Strategies - Idioma Ingles

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Creating Your Own Forex Day Trading Strategies - Idioma Ingles

Mensaje  Admin Cazadores de Pips el Dom Feb 28, 2010 12:06 pm

Creating Your Own Forex Day Trading Strategies


Did you ever wonder why or even how there could be so many Forex day
trading strategies all over the Internet and yet, there is still 90% of
traders fail. Is it because all these trading strategies don’t work? I
don’t think so. I’m sure most of them do work and generate profits.
Then the question is, why is it that when someone buys the Forex day
trading strategy it doesn’t work for them? There are many answers to
this question. For example, new traders always think that they can make
it a little better and begin to tweak the system a little. The
main factor is that they don’t identify themselves with the Forex day
trading strategies. They don’t spend enough time to learn all there is
to know about every detail of that system. They usually try it a few
times and when it doesn’t work and have lost some money along the way
they quickly abandon the system and move on to the next one. The truth
is, it’s very difficult sometimes to take a trading strategy that you
haven’t designed yourself and make your own without spending a lot of
time and testing. With a lot of these strategies you’re left on your
own without any help or guidance.

7 Key Steps To Creating Your Own Forex Day Trading Strategies
This section is going g to guide you through the process of developing your
own Forex day trading Strategies. There are 7 Key Steps to Creating
Your Own Forex strategies. While it doesn’t take long to come up with a
system, it does take some time to extensively test it. So be patient;
in the long run, a good system can potentially make you a lot of money.

1st Step: Choosing The Best Time Frame

The first thing you need to decide when creating your Forex day trading
strategies is what kind of trader you are. Each trader has their own
personality, their own time of day that they can trade, their own risk
tolerance, their own threshold for pain and they all have a different
account size.Some traders might have several things in common,
but most traders are different with unique qualities. And depending on
your trading personality, personal preferences, and situation, how you
trade will be a driving factor in determining your success. Are you a
day trader or a swing trader or a position trader? Do you like looking
at charts every day, every week, every month, or even every year? How
long do you want to hold on to your positions?

2nd Step: Find Indicators That Speak Your Language

What type of indicator speaks your language? One of your goals is to
identify trends as early as possible; you should use indicators moving
averages. They are one of the most popular indicators that traders use
to help them identify a trend. Specifically, they will use 2 moving
averages (one slow and one fast) and wait until the fast one crosses
over or under the slow one. This is the basis for what’s known as a
“moving average crossover” system. There are many other ways traders’
spot trends, but moving averages are one of the easiest to use. The
second goal for your system is to use indicators that help confirm the
trend. This will help to avoid being caught in false trend and being
caught in a whipsaw.There are many good indicators for
confirming trends, but I really like MACD, Stochastics, and RSI., and
the CCI for momentum. As you become more familiar with various
indicators, you will find ones that you prefer over others, and can
incorporate those into your system. Some Forex traders like to trade
naked. No, that doesn’t mean they trade without any clothes on. It
means that they trade without any indicators. They base their trading
decisions from looking at price action only and the formation of
candlesticks.

3rd Step: Define Your Risk Tolerance

When developing your Forex day trading strategies, it is critical that you
decide how much you are willing to lose on each trade. Many new traders
do not like to talk about losing, but in actuality, a professional
Forex trader knows how to lose. A good trader thinks about what they
could potentially lose BEFORE thinking about how much they can win. The
amount you are willing to lose will be different than everyone else.
You have to decide how much room is enough to give your trade some
breathing space, but at the same time, not risk too much on one trade.
You’ll can learn more about money management in the money management
section. Money management plays a big role in how much you should risk
in a single trade.

4th Step: Define Your Entries & Exits

Once you define how much you are willing to lose on a trade, your next step
is to find out where you will enter and exit a trade in order to get
the most profit. Some traders like to enter a position as soon as all
the indicators match up and give a good signal. It’s all really just a
matter of trading style. Some people are more aggressive than others
and you will eventually find out what kind of trader you are. You
have a few options when it comes to how you’re going to Exit a trade.
One way is to trail your stop, meaning that if the price moves in your
favor by ‘X’ amount, you move your stop by ‘X’ amount. Another way to
exit is to have a set target, and exit when the price hits that target.
Some traders choose support and resistance levels as their targets.
Others just choose to go for the same amount of pips on every trade.
However you decide to calculate your target, make sure you stick with
it. Never exit early no matter what happens. Stick to your system! One
more way you can exit is to have a set of criteria that, when met,
would signal you to exit. For example, you could make it a rule that if
your indicators happen to reverse to a certain level, you would then
exit out of the trade.

5th Step: Write down your Forex Day Trading Strategies Rules and FOLLOW Them!
This is the most important step of creating your trading system. You MUST
write your trading system rules down and ALWAYS follow it. Discipline
is one of the most important characteristics a trader must have, so you
must always remember to stick to your system! No system will ever work
for you if you don’t stick to the rules.

6th Step: How to Test Your Forex Day Trading Strategies The
fastest way to test your Forex day trading strategies system is to find
a charting software package that gives you the ability to go back in
time to almost any date and replay that particular day. A lot of
traders will go back in time and move forward one candle at a time to
test the trading system. But this doesn’t give you the real picture and
experience you need. You need real time to see how your indicators act
every second. How they move how they react to every situation. Only
then can you can follow your trading system rules and take your trades
accordingly. Trade this way for at least three months worth of
data. The nice thing about using a charting package that allows you to
go back in time and replay the live data for that trading day is that
you can speed up the chart whenever you want and trade three months of
data in about two or three weeks. Keep a journal and record all your
trades, and BE HONEST with yourself! Record your wins, losses, average
win, and average loss. If you are happy with your results then you can
go on to the next stage of testing: trading live on a demo account.

7th Step: Practice Your Forex Day Trading Strategies Once
you are satisfied that your Forex day trading strategies back testing,
Keep trading this way live on a demo account for at least another
month. This will give you a feel for how you can trade your system in a
live current situation when the market is moving. After two
months of trading live on a demo account, if you are still getting good
results, then you can choose to trade your system live on a REAL
account. At this point, you should feel very confident with your system
and feel comfortable taking trades with no hesitation. BUT, if you feel
under pressure and hesitating when your trading with your live account.
STOP, and continue with your demo trading until you get your trading
mind in the right place. You might need some help if this doesn’t work.
If you need help, look at the trading mind software.

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