A systematic way to create the perfect trading strategy

Developing the perfect trading strategy to trade the Forex market is not an easy task. Many people in Singapore have tried to learn the art of trading. Sadly they have failed due to various reasons. But if you find the key reason for which the retail traders are losing money, you will find a lack of knowledge and discipline are prime factors. To become successful at trading, you must focus on a strategic approach. For that, you must create a trading plan. In this article, we will give you the guideline to develop the perfect trading strategy according to your needs.

Know your preferred style

There are two basic types of trading strategies used by professionals. Some retail traders prefer to use the short term trading method and some use the long term trading technique. If you intend to change your life, make sure you are not taking aggressive steps at the initial stage. It’s better to become a position trader since the associated risk in trading is very low. On the contrary, those who prefer to trade the market with short term methods should have extensive skills in risk management. Most importantly, they need to have the ability to deal with the market heat. So, chose your preferred trading style before you start creating your trading strategy.

Predicting the market movement

You need to have a trading strategy to predict the price movement. And this prediction should be made based on a few important rules. If you want to succeed in the options trading industry, make sure you are not paying any heed to emotions. The emotional approach in trading always results in a big loss. If you want to change your life, make sure you are not pushing yourself to the edge. Focus on long term goals and try to improve your trading skills by learning from your mistakes. Once you get better at predicting the price movement, you can assume to have a balanced trading strategy. But never try to take too much risking thinking you know all. Nothing is perfect and you can’t say you can make big profits from this market.

Analyzing the risk exposure

Without analyzing the risk exposure, you can’t make any profit in the Forex market. Those who are losing most of the trades, don’t know the importance of risk to reward ratio. If you trade this market with a high risk to reward ratio, you can expect to make a big profit without losing too much. Trading is more like finding the perfect trades with low risk. And to do so, you must learn to trade the market with managed risk. Regardless of your investment size, you should not trade by breaking the rules. Stay in your comfort zone as it helps the traders to make a consistent profit. Stop risking more than 1% in any trade as you never know the outcome of the trade. Follow the path of the experienced traders and you slowly learn to place the perfect trades.

Backtesting your strategy

Before you declare that trading strategy is capable of making consistent profit at any market condition, you need to backtest the strategy. By backtesting the trading strategy you can expect to make big changes in the system. Stop thinking about the aggressive trading method as it always results in a big loss. Forget the fact, the traders have to take too much risk to earn more money. Stick to the conservative trading method so that you can make a profit without taking too much risk. Once you have backtested the trading system, bring change to your system. Try to eradicate the complex calculations as it ruins the career of the retail traders. Stick to the conservative method and try to improve your skills by learning from your mistakes. Never trade the real market without backtesting the trading strategy. Focus on the longer period data as it gives you a perfect trading opportunity.