When you browse the web in search of some guidelines to online trading, most of the content is supplied by platforms that will try as much as possible to persuade you to open an account with various brokers, be it in binary options or forex trading.
Now, when you get to the broker’s platform, some of the most notable messages go in the way of opening an account and receiving a bonus to launch your online trading career, while others suggest that you could become rich trading. Make no mistake; there are a lot of rich people out there who made money trading in forex.
However, if you were to ask them, the most common answer among them would be that they never did it overnight. Most importantly, they will emphasize the importance of planning even before opening your online trading account with a broker. This illustrates the concept of developing strategy when launching an online trading career.
So what is Strategy?
In Forex, strategy is basically a trading plan which involves the development of a framework upon which the trader can build trading decisions. Ideally, this process brings into play various aspects of trading such as instruments to trade in, markets, timeframes, risk/reward ratio targets, frequency of trading and which trading platform/broker to use, among others.
With strategy, a trader should be able to know what actions to revert to in case of unexpected huge losses on trades, as well as what percentage of profits to reinvest in the trading account and what to withdraw to a savings account.
A strategy also involves various technical aspects such as what indicators to use for trading and how to deal with market moving economic events. All of this should be part of the trading plan before setting up shop and should also allow for adjustments, because markets are dynamic.
Developing Strategy
When developing a Forex trading strategy, traders must consider various factors that could affect whichever plan they choose to follow. For instance, a full-time employee could find it difficult to do day trading, while a person without extensive knowledge in Forex may consider getting a money manager or an Expert Advisor system.
