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Trading Strategy

What is the Forex Trading Strategy and why it is important?

In the Forex market, a trading strategy is crucial. Unless a trading strategy, it is impossible to make a consistent profit. The Forex market is the world's biggest financial market, where most of the market participants are playing with millions of dollars. Therefore as a retail trader, it is challenging to sustain hair unless you have influential trading psychology and a proven trading strategy.

In the following section, we will see what the Forex trading strategy is and how it can provide you an extensive amount of money from the market.

What is the Forex trading strategy?

A trading strategy is a systematic approach or a technique that traders usually follow to make a trading decision. Whether you trade in the forex market or stock market or even cryptocurrency market, you should have a specific trading strategy to follow.

A trading strategy is a complete process of traders entering the trade and how he will manage the trade and when he will exit the trade. Furthermore, it includes a thread management technique that allows the reader to think about the trading progress and make the decision according to market behavior. 

A complete trading strategy should have the following characteristics.
  • Market reading from top to bottom
  • A complete exit and entry guide
  • Money management technique
  • Risk management technique
  • Institutional traders intervention
  • A proven track record

All of the characteristics mentioned above are important for a trading strategy. If your trading strategy does not have all of the traits mentioned above, your trading strategy is not complete. Furthermore, it may become confusing to see the institutional traders' intervention in the trading strategy as many traders use their approach based on the trading indicators. However, big institutional traders must drive the forex market, and there is minimal impact on retail traders. So as a trader, it is mandatory to include what the big players are doing with the price. Otherwise, it is difficult to profit from following a trading strategy with his set and forget approach.

trading strategy

There are thousands of trading strategies available on the internet, and it is difficult to say which trading strategy is the best. The trading strategy differs from person to person and from time to time. Some trading strategy works well in the political market, but some trading strategy works well in the non-volatile impulsive market. So it would help if you used the right trading strategy at the right time. However, if you don't have a trading strategy, you might have to suffer in the future. In the following section, we will see why the trading strategy is essential.

Importance of trading strategy

A trading strategy is a systematic approach that is mandatory for a trader to gain a sustainable growth of his account. However, there are many other things to know before joining the forex market regarding the importance of trading strategy.

Depth of the Forex market

The Forex market is the world's most significant financial market daily turnover is 6 million dollars. Therefore, trading in the forex market means you are competing with institutional traders who have an extensive amount of money to drive the price. You believe it or not, and the forex market does not care what the retail traders are thinking about the cost and what your strategy is telling. Therefore there is a higher possibility that your trading strategy might go wrong or you do not understand what the reason behind it was.

If you follow a systematic approach, you can minimize the race in an uncertain market condition and boost the profit when the market allows you to do so

Understand the Context

There are some characteristics of the market. When the market breaks in necessary support and resistance level, it runs at a massive speed. On the other hand, there are some key levels where market reversal is expected.

If you want to make a profit from the forex market, you should understand these levels and these characteristics of a trend. If you ignore this, your entire investment would likely be at risk. Without a trading strategy, it is not possible to understand this.

Chart Reading Techniques

When you look at the MT4 or MT5 chart, you should read it from left to right and understand what the candlestick is telling you to do. Every candlestick and every movement of price represents a story. You must follow the language of charts and implement them with the right opportunity at the right time.

trading strategy

If you ignore the trading strategy and take randomly based on nothing, you might make a profit in some trades, but your entire investment will vanish today or tomorrow

Profitable Trading Strategy

Thousands of trading strategies in the world but all of them are not profitable. We know the forex market is ever-changing, and the technology is improving, and human psychology is getting complex. So the trading strategy that worked 3 or 5 years earlier might not work now. Moreover, A trading strategy might give you profit right now but will not be profitable in the future.

So, a profitable trading strategy can provide profit in all types of market conditions. For example, if you trade based on price action to sell, our market trend is bearish. The more when the market approaches the significant support level, we would look forward to a reversal Trading strategy and a bi setup. So overall, you are using both buy and sell in your trading strategy. Therefore, we can consider price action as a complete reading on a specific portion of a trend.

Conclusion

A trading strategy is a systematic approach that is mandatory for a trader to gain a sustainable growth of his account. However, there are many other things to know before joining the forex market regarding the importance of trading strategy.

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