Alone among all other beneficial factors that make a trader’s endeavor successful, the effectiveness of his strategy plays the most vital role. An investor cannot take another step until he figures out the strategy he is going to follow in his trading.
Build a Professional Trading Strategy
Constructing an effective trading strategy is not an easy task. To make it something that really works, you have to consider a few aspects while formulating it. You will get to know some of the crucial steps in developing an ideal strategy.
1. Tools & Indicators
Forex investors often commit mistakes like picking merely a few indicators or instruments for applying them in different charts. When picking these instruments, they become careless about the current market condition. By contrast, a Futurestrader in Hong Kong understands that every indicator and instrument has been designed for a special market condition. They give the most optimum result in the respective condition they are designed for. To trade futures like a pro, you need to trade with Saxo Forex broker. By choosing such a great broker, you will be able to use their advanced technical tools.
For instance, different oscillators are mainly designed to use during ranges, moving averages are to be used during trends, and momentum indicators work best for reversals and trends. You need to recognize the market condition before deciding which instrument you need to exploit.
You can decide to trade only in certain phases of the market. Thus, you can use the tools you are most comfortable with.
2. Market Cycles
The market charts will present to you different market phases and special scenarios. Regardless of which timeframe you are following, you will see similar activities and patterns in a market. Though the sequence, pace, and rhythm will vary from market to market, you will find some of the phases appearing in all types of chart. These include:
- Early trend
- Breakout and pullback
You have to accumulate in-depth knowledge about these phases so that you can strengthen your strategy.
It is of no importance whether you are trading with trends, breakouts, or pullbacks. These patterns appear in all the timeframes available. So, when it comes to adaptability or acceptability of a timeframe, you will not find a single timeframe better than another.
When such is the case, the best idea is to find and work with a timeframe that suits you and your trading approach. You just have to evaluate two characteristics.
- Thinking style
- Emotion control
If you think you have a fast-paced thinking style and can make decisions quickly and precisely, not blow away with your emotions, you should go for the lower timeframes.
If you are more of a strategic thinker and you find your emotions hard to control, a higher timeframe will suit you the most.
Once you have figured out all the critical parts of your trading strategy, like which market you are going to engage in, which timeframe you are most compatible with, different market cycles, etc. It’s high time you created some rules.
Only rules will fill the unnoticeable crevices of your trading strategy. You will see the results spreading all over the place if you dare to advance without following any guidelines. You need to set rules for every subtle segments and action of a trading endeavor like:
- Trade, money, risk managements
- Stops and targets
You should deal with all these actions and concepts with proper care. Otherwise, you may wind up perceiving them wrongly. This will lead to poor rule or guideline construction, and your whole strategy will have been created in vain.
Once you have constructed your version of a professional trading strategy, you should still not engage in live trading. You should spend some more time testing its efficacy in a demo account. Thus, you will come to know all the weaknesses of your strategy, if it has any. So, you can tweak it to make it an ultimate weapon in the market.