Finding a forex trading strategy that will actually contribute to you making consistent money in the forex market is certainly no easy task if you consider the number of forex systems and strategies available on the internet these days. What are some of the core features that a forex trader should look for in forex trading strategies that make money? We all address some of these features in the following discussion.
• Consistency and Belief
A forex trading strategy that provides trading signals that bring some amount of consistency to your forex trading is one that is likely to help you make money. While you can never expect 100% consistent trading signals, you should expect that your forex trading strategy gives you high-probability trade setups on a somewhat consistent basis. If the particular trading strategy you are using fails to provide these high-probability signals at least once a week or more, you are going to have a very hard time trying to make money with it.
Another very important factor in making money with the forex strategy you are using is to make sure that you fully believe in the power of the strategy. Many traders get discouraged with their trading strategy as soon as they hit a losing streak, the key fact to remember here is that all forex trading strategies will experience some losing trades, it’s just the nature of trading. So, just because you’re trading strategy loses on a few trades a month or even in a week, does not mean it is not effective. You need to calculate the average winning percentage of the strategy over a large number of trades before you will truly know whether or not it gives you a high probability of making money in the market.
• Not Heavy on Indicators
Indicators like MACD, Stochastic, RSI, and the hundreds of others out there can really be a huge detriment to making money in the forex market. Many traders erroneously believe that such lagging-indicators will give them a better view of what price is doing than what standard price-pattern trading and analysis can provide. The very fact that lagging indicators are derived from raw price movement means that the message they display was first created and displayed by the price bars underneath the indicator. Since this is the case why not just cut out the “middleman” which is the lagging indicator, and learn to make your trading decisions off of time-tested technical analysis techniques like support and resistance analysis, trend lines, Fibonacci retracements, breakouts, and simple price action analysis? These “core” technical analysis strategies are much easier to trade off of than lagging indicators and as such will give you a better chance of making money consistently than trying to use some confusing mess of indicators.
• Higher Time Frames
Higher times essentially act as filters for market noise. Generally speaking, the higher the time frame the less market noise there will be, this means that forex trading strategies that make money will typically be ones that allow traders to make use of the power of higher time frames. Many traders fall into the trap of believing that by trading shorter time-frame charts like the 30 min chart and lower, they will somehow gain more “control” over the market or have more profitable trading opportunities. This idea of “controlling” the market is simply impossible and is something that all professional traders have long since forgotten about. The only thing you can control in the market is your own personal behavior, and until you learn how to do this you will lose money. As far as the idea that lower-time frames create more trading opportunities, this is true up to a certain point. Once you go past the 1hr time frame the quality of the available trading opportunities becomes so low that it is more of a coin toss than a game of skill and strategy. Always remember that the higher the time frame the higher probability of the signal. Click the following link for information on choosing a forex trading strategy.
