To choose an appropriate trading strategy for your forex trades are among the most important things to set up when you start out. Here we go through some important things to consider, escpecially if you choose to trade yourself and not use an automated forex trading robot.
Some of the first questions you need to ask yourself:
1) How much am I willing to risk?
2) What can I potentiall earn and what is the risk downwards?
3) How is the market at the moment? (slow or volatilel)
4) What is the logic behind entering this position?
5) When or how fast can I find out if my logic behind this trade is right or wrong? (make sure to put out a stop loss)
Above mentioned questions should be considered before every single trade.
Further, there are two more things for forex traders to consider before entering a forex position; forex news and technical analysis.
Forex strategy basics: Check out the latest forex news
-Interest rates: Make sure to check out the current interest rates and any changes that are likely to come. A country with relative high interest rate, everything else take out of consideration, the better exchange rate could be expected.
-Financial news: Almost every day there are some kind of news effecting foreign exchange rates, such as some kind of statistics, central bank meetings etc. You need to know about those and make sure to not be in the market when major news coming out, unless you have a wide spread and are willing to risk a lot. We got a section called Economic calender, here you will find the a majority of the forex related upcoming events.
All serious forex brokers support technical analysis. Often, many indicatiors are included in the forex trading platform. We recommend to focus upon maximum 2 or 3 technical indicators, for instance Moving average, Fibonacci and RSI.