Coming Up with a Simple Strategy

For any trader wanting to be profitable in long term currencies the best way to do this is to come up with a simple forex strategy to follow when trading the market. A simple forex strategy will have simple rules that will be easier to follow when the online forex market.

Many currency will complex systems that will have many rules that are to follow when trading forex market & at some point these traders realize that these complicated systems & techniques are not the best in trading with them in the market because these systems have complicated rules that are hard to follow when trading the fast moving market of currency exchange trading.

Many beginner traders try to come up with complicated forex systems that use many different indicators to analyze the currency market. Instead of using 2 or 3 indicators to come up with their indicator based method traders will use five or more indicators which make their system very complicated. Generating signals will mean waiting for the five indicators to give the same signal and sometimes because there are too many indicators some trading indicator may give opposite signals at the same time thence confusing the trader even more on what direction of trade they should take when opening a trade transaction.

Because the market is a fast moving market and the currency market moves are volatile it is best that traders do not trade with a very complicated method. Instead a fx trader should try and come up with a trading system that will identify trends early enough & at the same time have a way of validating these trade signals so as to eliminate whipsaws. As long as a trading system can accomplish this then the trade system will give good signals most of the time. But instead most traders want to put more and more trading indicators on their systems to confirm a signal that is generated when only one technical indicator is required to confirm the signal. By putting too many trading indicators a fx trader can get conflicting signals because the chance of one trading indicator giving an opposite signal to other technical indicators is very high, therefore meaning that instead of getting the confirmation signal that a trader is looking for a trader might get more confusion instead.

For this reason it's best as a forex trader to create a simple trading strategy with fewer rules that will be easier to follow when trading.

The first thing which a trader needs to determine before opening any trade is the trend of the market. The trend of a market is the overall direction that the market is heading towards. When a currency starts to move in one direction it will keep moving in that direction for some time because of the momentum that the direction will have. This momentum will result in a trend. The trend is the most reliable method that can be used to trade currencies. In general traders will find it is to make money when the market moves up and also when the market moves down, but they will find it very hard to make money if the market is moving nowhere.

What this means is that traders should first determine if the market is moving up or down before deciding to trade. If the market is moving up a trader can open trades in that direction and if the market is heading down a fx trader then can open trade positions in that particular direction. But if the market isn't heading in any particular direction and the prices are consolidating then a forex trader should not open any trades & should stay on the sidelines.

After determining if there is a market trend or not a forex trader can then use their system to detect when to open a trade transaction.

The system should thenceforth not be too complicated to follow its rules.

The task that traders should focus on is determining the current market trend whether the market trend is up or down and this is what will determine the profitability of the trade strategy that a fx trader is using.

There are many technique of determining a trend most of which are covered in this web site on the trading strategies section of this site. Traders wanting to learn these strategies can go to the strategies section and do more research on which strategies are used to determine price trends.

After researching and deciding which technique or strategy is best for them a trader can then use that strategy to come up with their own simple method or system that has simple rules that will be easy to follow when trading the online currency exchange market.

More Lessons:

Trade Forex Trading

Coming Up with a Simple Strategy