Why You Never Earn Just a Dollar from the Forex Trading System

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With the forex market, your trading strategy is set on rules you should follow to find, enter, and exit trades profitably. A sound strategy will help you manage risks and make better trading decisions. Here’s how you can build a functional forex system.

Fix a time frame.

Before you enter any trading deals, you need to determine the kind of forex trader you desire to become. Although you could use multiple time frames, it’s in your best interests if you decide on one type of forex trade and stick to it. You could be a day trader or swing trader, both of which have its functions.

If you choose to be a day trader, you will use a shorter time frame since you will open and close your position within a day and not overnight. So in such an instance, anything within a 5 minute to a 4-hour chart will suit your needs. Swing traders hold trades for several days or weeks. If this is the option you want, then you may need to use a daily chart.

Select Indicators that help you identify and confirm trends.

As a forex trader, market trends are your allies. If you want to be great at algo-trading, you should be able to identify and define them to stay ahead. A tip on how you could determine trends is by analyzing moving averages. You can avoid identifying false patterns by using tools like Stochastic, ADX, Relative Strength Index (RSI), and MACD. However, although it is advisable to combine them, be careful not to use too many as probability change from platform to platform.

How much you’re willing to risk.

How much do you want to lose on each trade? You must decide on this early because of the way you manage your money and risks determine how successful you are at algo-trading. Experts are advisable to risk something between the ranges of 1% to 2% of your capital on each trade.

What are your entries & exits and risk-reward ratio?

The next step is to see where you will enter and exit your trades in your forex trading systems. This depends on how you choose to trade. How do you prefer to buy with regards to indicators, candles, and resistant levels? The options are multiple, and it all boils to what works best for you. The most important thing is to ensure your risk-reward ratio should be less than one.

Test run, and stay disciplined.

After doing all the suggested steps, you need to test-run the system before you start trading with real money. To be on the safe side, use a demo account for a while. After ramping enough profits, you can then decide to use a live account.

To be a successful forex trader, you need to be disciplined. You can increase your discipline levels by writing and abiding by all your trading system rules while imbibing more emotional control. You can increase your odds of becoming a successful trader at forex trading by consulting with a seasoned expert who will help you navigate the twists and turns of forex trading.

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