It might sound strange to you but my personal forex experience proves this headline. Despite the myriad of technological software developed and built for the last 15 years, forex is still the market of personalities. And having analyzed trader’s choice of tools it is possible to understand the basics of trader’s personality.
People arrive to forex with wealthy-over-night ads in their minds and images of the ocean front villa and the laptop next to the pool. Most of these images fade very quickly and most of such people lose and go home. Forex is a strange place but once you decided to jump in look at it as a place where there is no magic happens and hard work awaits you.
Choosing a trading strategy is a tricky thing. New comers usually make on and the same mistake – they are trying to find the Holy Grail and the best and the most money-making strategy ever.
However, learning is the key to success. Let’s have a look at ideal trader and what would he/she do in the ideal world:
- Lots of learning. An ideal trader would start learning how forex market is built, who is who and what the relationships are between a trader a broker a liquidity provider, etc.
- A trader would analyze and review different strategies and approaches to successful trading. That requires a lot of homework. Reading forex robot review sites, analyzing different software developers and their performance as well their products.
- Only then an ideal trader would pick up several software items and play with them before entering a real-life world of trading.
Having completed these three steps a trader will increase his/her chances of not losing funds on day 1.
I would like to say a few more words about choosing the trading strategy and building your own trading system.
A trading system is nothing but a set of rules and principles of market data analysis and trading. The core of the system is your software or a set of algorithms that is carefully crafted to carry out your trading according to your set up.
I believe that successful trading is only possible when you have created your trading system. You’ll know exactly what kind of signals the trading system generates, at which phase or stagethe market currently is, what asset you should buy or sell, what amount of funds should be invested into a deal, etc.
Eventually, after a long search of different paid and free trading systems, (they are also called forex robots) each trader will arrive at his choice of strategy and the software. Believe me it won’t have to be your own algorithm, indicator or math model, you can pretty much do well with the existing and tested software products.
I believe a successful forex software is likely to be developed by a company with extensive market experience and trading experience, so pay attention to a developer of the product in question. Check how many products have been released, read the reviews on special forex robot review sites, talk to other traders in the social networks and get an understanding who the developer is. The other key thing is a post-purchase support – a good developer will help you set the software up and avoid unnecessary hassle.
I see three major points in creating a trading system:
- The chosen strategy of the trading system
- The accepted tactics of the trading system
- The management of funds
A global vision of your trading defines your strategy. If you see the forces behind the market and recognize signals that will be shaping the market in the nearest future, you can build a great strategy.
Tactics is your response to what you recognize in the market. So here you need to employ your chosen software and interact with your trading signals. And that is a point where your personality kicks in. How many filters do you prefer prior to decision? What methods do you employ to analyze the market? Do you stick to one currency pair or the whole list? These are the questions you will need to answer as a trader.
My favourite trading strategy is Arbitrage and it took me a few years to arrive to a successful Arbitrage trading. I was building and re-building my strategy along with the market development. For example, when brokers spotted my Latency Arbitrage trading and delayed my orders and/or increased slippage I had to adjust and improve. I mastered a 2-LEG Arbitrage trading where brokers can’t identify that it is an Arbitrage trading in fact. Lately, I came across of a very interesting concept called Lock Arbitrage that allowed me to make another step forward in finding my successful trading strategy.