Aug 2, 2019 4:10pm

A good trading strategy characteristics


Today we are going to discuss more valuable part of the Forex,. So, lets jump on the journey. Trading strategy is the most common phenomenon of the Forex. At first, we have to know what’s the trading strategy? It’ mean that, how do you trade, a complete trading plan. Of course, you should have proper rules for your trading. Hence, if you are going to buy or sell, you must have got specific reason for that. A good trading strategy definitely tells you, when you should go for buy & sell or abstain from the trade.


 A good trading strategy must have the below characteristics ;


---- When you do buy or sell or refrain from trading.

 --- It gives you the exact proportion of volume/lot size per trading.

---- What amount of risk you can take in each trade ?

 ---- A good trading strategy must figure out your stop loss/take profit/trailing stop.

 ---- How many trades you can execute in together.

--- Why you should go for trade now? & you have to do buy or sell.


Every trader has a different style of trading method . Some of them continue their trade to watch an indicator, someone tries within price action & noticeable thing is that, there are so many traders, who execute their trade only see the market price of a particular pair. But if you have a perfect trading strategy, then you will not have to face this kind of dilemma  like do I go for buy or sell ? You don’t need to ask someone & need not buy a signal for your trading. Because you should know how to make signal, if you have proper trading strategy. You can sell your Forex signal as well. ( But keep it in your mind, if he will loss, definitely he blames you)

 Most of the traders follow the indicator, so at first let’s talk about the indicator based trading strategy.

Here is the example no.01

Please check out the below chart:


Here you can see red line. It is moving average line. Suppose, it is our trading strategy. Moving average indicates the market trend. When the candle will close above the red line, its indicates the buy signal, & if the candle close below the red line, So, we can say that , it’s a sell signal. You made a trade & got some profit as well. ( please note that, it is not working always) We will talk later on, how can you make your signal more risks free. If anyone asks now why did you go for buy, why not sell ? Then your answer will be your trading strategy. Your trading strategy told you to do it. From now on, you don’t need to trade by only your guess. This trading strategy will tell you , it is the right time of the buy or sell. You will run your trading in that way. Is it not good for trade than your guess trading?


 Example no. 02

Now we will add extra indicator with moving average to more accurate our signal.

Parabolic indicator has added to the chart. Now these Two indicator, what they tell we will do it. If they say sells with together, then we will do it. If they say for buy with together , then we will be going for buy. But if these Two indicator indicates different signals separately, then we will refrain from trading. In parabolic indicator, when, dots stay below the candle, its indicates for buy, but when it is in above the candle then it is a sell signal..

                                           Please check out the below chart.

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Please see, moving average stayed in above the red line, & parabolic indicator showed dots stay in below the candle. It’s seems both candle is pointing out for buy signal. These are just examples. This is shown for understanding..





Exit from the trade :

So, your trade is open now, gets some profit as well. Here, the main point is when you close trade ? How much profits, you will close our trade, 10 pips, 50 pips or more ! Or your trade going to losses, so how many losses, you will accept ? 10 pips? Or you will wait until 200 pips loss. Hence, you should have proper rule to get out from your trade.


 It depends on your money management. Suppose you have deposited $1000. You want to take 5% maximum risk on your every trade. Then, we can say that, you are ready to lose maximum $50 on your each trade. If you want to set up 50 pips stop loss then your pips value will be $1. But if you want to set up 100 pips stop loss, then your pips value will be 50 cents.



 Now come to the point, why you have to close your trade :One reason may be, you have already got your targeted profit. So, you don’t need to more profits. You should close trade now. Another reason is that, market trend may change, so there is a chance to reduce your profit, or loss may increase further. So, you should close your old trade, & try to catch the new trends. Loss trade will convert in profit, hope this in that way is such a foolishness. The reason for fear is that, many traders in Forex market, they think that their loss trade transformed in to profit that’s why they consume a huge loss. So, you should follow always your trading strategy .


 How to set up your stop loss : You can set stop loss according to the support, resistance & pivot point. You can set fixed 30/50/100 pips stop loss, but most often this type of stop loss is the reason for loss.


 How to set up take profit : You can set take profit alliance to support, resistance & pivot point. You can also set take profit fixed 30/50/100 pips. As a trailing stop you can set 15/25 pips. Trailing stop will automatically set the points of your trades while trade profit will increase with a fixed number of pips.


How much do you trade in together :It depends on your trading system, how many trades, you will do together. Please keep in your mind do not trade more than 5% of risk. If you want to trade with different pairs at once, to keep an eye of your risk, (all of your trades) so that it should not more than 5% of your account balance. Overall don’t give any chance to lose more.


Last words :

Now, you know how to trade. When you are going to buy & sell or refrain from the trade. While trade will close to lose or how much profit you should take. These elements are your trading strategy, If you not trade in accordance WTH the trading strategy it’s mean that you will lot closer to lose. Now pick your right weapons from Forex arms & create your own trading strategy. You can test other strategies, those are good, add this in your strategy & make your strategy more developed & share with us. You can ask questions if you have any query. Stay with pipslover. Com.