10 Steps to Building a Winning Trading Plan

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Forex trading strategies are always a popular topic because it is the prime method for which traders measure success. All Forex traders are very keen on reading or finding out about Forex strategies, or even willing to pay for them… Others spend hundreds of even thousands hours scanning the market in search of a good Forex trading strategy. Investing time and resources in good Forex trading strategies is definitely very important task, and I fully support that.

There is however a couple of pit falls, which I advise a Forex trader to watch out for and avoid. Or in other words, the quest for the Holy Grail. This intensive search leads to an undesirable situation where the Forex how to build a winning forex trading system keeps trying to improve their own trading strategy. This process will either bear no fruit at all, or best will lead to the number of entries being reduced to such a small sample that the reliability of the testing results becomes questionable.

For mechanical trading system to work, traders must ensure that enough data is tested over a sufficient period of time. Doing this work without a skilled programmer could prove to be mountainous task. Of course, trading strategies are of key importance. But not to the extent that a Forex trader can have the freedom to neglect other vital element of the Forex business.

Risk management and money management are vital to ensure that the trading capital is protected. A trading plan is crucial for measuring performance. Building a trading psychology is important to follow the trading plan. And then within trading strategies, there is a difference what a Forex trader focuses on.

Then your biased is too heavily skewed on only one part of the trading strategy process. Before we dive into all of the details and goodies regarding the Forex strategy, take a look some of these great articles. Of course as I am sure you are aware, all traders must have a trade plan. As an extra clarification: With that out of the way, we can now focus on the elements and how to build a winning forex trading system of creating and building a Forex trading strategy.

Just to make sure that everyone is clear on the goal of the article: With these tools in hand I hope that any development of your trading strategies become more logical and easier to complete. First of all, we should mention that the type of trading strategy you create will influence elements of risk management, just as items such as money management influence your trading strategy and your trading psychology influence your trading style and trading strategy.

So all these elements intertwined, but I will mostly focus on creating a trading strategy and the building blocks. As an example of a Forex strategy that I have created myself, I will provide links to the million Dollar strategy which I have released not so long ago.

Please take a look at those parts here:. Second of all, I want to dive into the question that some of you might have: In theory, it is true that anyone could in fact trade at any point in time on any currency and they might win a few times.

Only highly experienced traders with loads and decades of experience might structurally succeed in consistently earning money with that though. This is an extreme level of proficiency and anyone applying the same without the proper background could lose their trading capital within an hour. Plain and simple, the rest of us are going to lose capital that way.

Without a trading strategy, there is no guidance, no support, and no methodology for the trade to tackle the market. There is no systematic method of the Forex trader to analyze, judge and trade, which can create trading chaos. Last but not least, it will help with building patience.

We want to trade all the time… but patience is vital. Forex traders need to wait for the moment that their trading strategy is at their best. And this can be less often then you think. That leads us to the first choices a Forex strategy must how to build a winning forex trading system but before we start that process, it is a MUST to read through this article on Forex trading systems.

What is your trading psychology? What are key elements of your character and how can they influence your trading? You must know thyself before you can match your how to build a winning forex trading system personality to that of the Forex market. An impatient person might trade better using a scalping system, while a more laid back person would thrive better in a long-term trading environment.

How much guidance do you as a trader need or feel comfortable with? An algorithm would best fit this type of Forex trader. Other Forex traders feel fine with having guidelines but want to leave space and room for their own interpretation of the price and market movements. The advantage of this method is that it allows traders to filter illogical entries and decision, which are not align with the market movements.

This makes sense because the market is fluid as it is the grand sum of the psychology of all market participants. That is why the market is always and how to build a winning forex trading system changing.

The discretionary element will keep your strategy in sync with the market. An algorithm might do very well for 2 years but horribly fail in the third. The solution for that is a regularly development and update of algorithms. In many cases the more experience and knowledge a Forex trader acquires, the more comfortable they tend to feel with adding parts of discretionary trading within their trading strategy.

What do you think? How do you trade? What do you feel more comfortable with? Write down your opinion in the section down below! What elements do you want to use for your trading: Read here more about technical analysis. Read more about fundamental analysis via blog posts of Tony. The market varies and does not exhibit the similar behavior during how to build a winning forex trading system day, week, month, year and decade.

The market does how to build a winning forex trading system patterns but the exact movement of each how to build a winning forex trading system is different. Just like all humans have finger prints but all finger prints are unique. The same holds true for the market. Due to these differences, a Forex trader must know when to employ their trading strategies at the correct time.

One of the most dangerous things that can happen is when a first time new Forex trader makes a ton of money when catching a strong trend. The novice trader has no clue that the trend time is limited and then loses profits in chop time.

So the following questions are key: What types of trading strategies watch with your trading personality? What fits your schedule? Can you handle multiple styles or do you feel more comfortable focusing on one? Do you want to focus on 1 of these 3 and wait patiently for your environment to emerge and potentially scan more currencies? Or would you rather trade all environments, but maybe more focused on 1 or a few currencies? There are many other elements we want to discuss.

We are about half way now and we are going to release a 2nd part on how to create Forex strategies next week Friday, so make sure to check that out! If you think that we can help you out with creating your own strategy, that sure is correct. Check out our Forex services here:. In the mean time, thank you for sharing this article!!! That is greatly appreciated!!!! The article post is focused on how to build a Forex trading strategy. Or in other words: Please take a look at those parts here: To be exact a Forex trading strategy will help with: Creating a Strategy Portfolio.

Here are the different types how to build a winning forex trading system trading strategies: That wraps up the article for today…. Check out our Forex services here: Forex trading how to build a winning forex trading system In the mean time, thank you for sharing this article!!! Have an awesome weekend and Good Trading!

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