Currency Trading Strategies

With an ever increasing number of individuals taking up trading on Forex it is perhaps no surprise that the desire for profitable trading strategies is also on the increase. The objective of traders is to make money from their trading and to do this they will spend time trying to seek out the strategies that deliver high performance on their accounts.

Many traders will spend a lot of money in trying to find the top systems, when in reality this is not necessary to make a steady profit from your trading. Often good performing systems can be found for a negligible cost or even free. These will frequently perform as well as, if not better than many of the more expensive systems that you often see promoted on trading sites.
Simple Guidelines For Choosing A Currency Trading Strategy

Forget over complicated systems:
There is no reason that a complicated system which makes use of a range of indicators and rules should perform any better than a simple system. Not only can complicated systems take up a lot of your time to trade, they can also see you make mistakes when implementing them if the mechanics of the system are too difficult. You need to find out more information on any system you intend to use. A currency trading strategy should be simple to understand and implement. It should also not be so time consuming to take over your day.

System Risk:
It is important to understand the level of trading risk that the strategy takes on each position. Ideally you will want to see a good risk to reward ratio on each trade taken. For example if the system targets a profit of 30 pips and the amount risked (i.e. where the stop is placed) is 60 pips, then you know straight away that you need to win two position to cover just one loss. Too many would be traders will blindly ignore this point and put their faith in the system when it does not take much to see that the odds are stacked against them.

Yes you can make money from systems with a poor risk versus reward ratio but you have to consider whether this performance is the result of a lucky streak and how well it will hold up over the longer term.

Money Management Is Important:
A system strategy is simply that - a mechanisms that will help you to identify points to enter the market. However what many of these strategies lack are a set of accompanying rules for managing your capital and risk. More than anything else, this will determine the success of otherwise you get from using a trading strategy. it really is that important. A quick rule of thumb is to never 'risk' more than two per cent of your available trading capital on any one outcome.

Find Some Past Performance Figures:
This step is really for you to help validate the performance of the system before you make a judgement as to its suitability for trading. Results from live trading will provide you with the most accurate indication of performance. If you are able to find more than one set of results then you can at least cross reference the performance claims as you need to be sure that the strategy results you are looking at are making use of the same trade settings that you intend to use.