My Forex Trading Strategy
- The system is simple & profitable, you will understand the forces that influence the Forex market, follow it consistently and you’ll get profitable results.
- You will trade all markets, the system applies to any other liquid market such as gold, oil, indexes, stocks.
- 1% of risk per trade, I only risk 1% of my account on each trade (it can be adjusted based on your risk profile).
- On the profit side, I don’t enter a trade unless I have at least 3% of profit potential per trade (it could go up to 10% per trade).
- I trade based on price action (No fancy or lagging indicators), I trade based on what the market is telling me, not what an indicator or a magical formula is telling me.
- Several Time Frames Analysis, in order to get a better accuracy, I perform several time frames analysis, if everything is in line, I trade it.
- Trading Plan, my system allows me to develop a trading plan for each day: which currency pairs to trade, in which direction and possible entry levels.
I never try to guess where the market is heading. Guessing market tendencies is dangerous because most of the time we will make “buying” and “selling” decisions based on what we “think” the market could do. We might make wrong decisions based on a bias that was formed because of a subjective methodology, or on some publication we’ve read, or what a trading pal told us. More than 10 years of ongoing trading experience shows me very clearly that it is impossible to get consistent results by guessing the market.
What I do? Instead of trying to guess where the market is heading, I trade according to what the market tells me. I try to identify the market condition and base my trading on this condition. If the market tells me that it has high probability to go up, wIll try to find long opportunities; if it tells me that it has high probability to go down, I’ll try to find short opportunities; if the market is ranging, I look for our entry around the bottom or top of the range. In other words, I always adapt my strategy to the specific market condition, and never expect the market to adapt to the way I trade.
Most currency traders base their trading decisions on technical indicators. The problem is that most indicators are a simple formula applied to price (close, open, high or low) for a determined period of time. This can indeed tell us how the market has behaved during this particular period of time, but believe us – this has nothing to do with the future behavior of the market.
What I do? I enter the market based on price action. The market itself tells me to enter it when it has a higher probability of heading in one direction over another. It is a simple and objective trading methodology that can help you get consistent results.
Most traders base their strategies on good accuracy. The accuracy of the system refers to the number of positive trades over all trades for a chosen period of time. But there is one slight problem – we never have control over the accuracy of the system. The market decides whether it is going up or down, so that the accuracy of the previous 10 trades has nothing to do with the accuracy of the next 10 trades.
What I do? Instead of trading based on a good accuracy I trade based on a good risk reward ratio (RRR). The RRR refers to how many pips I’m risking and how many pips I’m willing to make on one trade in a set of trades. When I base my trades on a good RRR, I can have the same amount of winning and losing trades and still get good trading results. This way I will not depend on the accuracy of the system to get consistent results. Additionally, it enables stress free trade.
At the beginning of the day I end up with a short term and a long term trading plans. Every day I analyze the long term charts to determine which currency pairs I’m going to look at for a trade opportunity, and the short term charts to determine what the market needs to do to get me ready to trade. This helps me create a very well structured plan and trade with more discipline.
Trade, risk and money management
These are aspects of trading which are frequently forgotten, though they are very important (I would dare to say that they are even more important than market entries). Risk management refers to the methodology we use to define how much to risk on each trade. Money Management refers to the methodology we use to determine how large our next trade should be (position sizing). Trade management is how we manage our trade once we are already in it (partial profits, pyramid in, etc).
At the end of the day, all I’m doing is using the probabilities on my favor.
You can trade using our strategy as well to get consistent results, click here to learn more about my training program.