A winning trading strategy is one which is designed to fit the trader’s preference in market conditions and comprises set up and an entry rules.
It is possible to devote ones-self full time to online trading. To do this however a trader needs a business strategy that enables him to make money. This means that you should create a winning strategy or strategies. It is possible to develop different strategies for different market conditions. Trading on-line is a 24 hour business because you can choose to trade in all the time zones or just in the European time zone or the North American time zone. You could even create a winning strategy for each of the four main times zones.
Trading as a Business – Creating a Winning Strategy:
Once you have decided on your strategy and you know in which direction you are going in and you also know the market conditions you prefer working in, it is now time to develop the rules you are going to use in your strategy.
Strategy development is all about taking the appropriate technical indicators for your particular market condition and creating the set up and execution of the strategy. The key to designing a winning strategy is to pick the right indicator for the right market conditions. For example there is no point in using an ADX indicator for a support and resistance strategy. It is imperative that the appropriate indicator is used.
Once you are sure that you have the right indicator for the strategy it is time to create the set up. The set up is simply an indication that there is a possible trade it is not signal to trade. The set up is only part of the equation the entry point is the other part. Many traders assume that the set up is also the signal to enter the market. That is a bad mistake and leads to many frustrations and more often than not the particular indicator being scrapped in favor of another one. If trading using set ups only was a profitable business then forex trading would be much easier than it is and more traders would be making a lot of money.
Once the rules of the set up have been created it is a question of waiting and watching the market until the point that the rules of the set up have been met. Then the entry rules must be set. The entry rules should first of all require that prices are moving in the right direction. The entry must certify that whenever your entry it will cover all the moves that your set up rules have accounted for.
Your entry rules should also cover such aspects as the type of order you will use. Will it be a market order, or limit order, or stop close-only order, or a stop order?
Once you have completed the set of rules for your set up and your entry all that remains is to test your strategy and tweak it if you are not happy with it. This must be done in a disciplined fashion and more than once until you are absolutely happy with it.
Now you have a tested strategy go into the market and trade it and make money.
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