Forex Trading Strategies

Welcome to the Got Money FX education section on creating a forex trading strategy.

A trading plan is a set of rules that dictate all of your trading decisions. Using a trading plan has many advantages. You know what your decisions are going to be, so you do not make emotional decisions. It’s the same process day in day out which will reduce silly mistakes and errors. You may even be able to automate it so that an Expert Advisor trades for you.

Of course trading plans have their risks as well, just because you have made a plan doesn’t mean its going to work. Usually what makes the most amount of sense doesn’t work!

There is no magic system that works perfectly all the time. The perfect system is the one that you understand, are confident with and meets your trading objectives.

Trading plans are broken into 5 categories –

Goals and objectives – What are you trying to achieve, what is the big picture? Are you looking for income or capital growth? What is your float? etc

Entry rules – Exactly when to enter

Risk management – Exactly how much to risk on each trade and how many lots to open

Exit rules – When to close your positions

Testing and evaluation procedures – How to test your system and record characteristics like win/loss ratio, average profit per trade, average loss per trade etc.