There is no magic formula or secret behind profitable forex trading. Successful traders make money day in and day out because they have a robust trading system that works no matter what.
Like experienced traders, you will need to have a Forex trading strategy before you place your first live trade. If you want to trade profitably, you will have to follow your trading plan religiously.
Having a robust forex strategy is crucial in volatile currency markets
Due to the volatility of the Foreign Exchange Market, it is sometimes challenging to react coherently in a fast move. To make the right trading decision in fast-moving markets it is vital to follow a trading plan.
In the middle of a volatile trading day, a robust trading system is essential due to the following two factors:
Emotion and stress
A trading strategy takes away emotion, which is not a useful attribute when you are under pressure and need to think clearly and rationally.
Having a forex strategy means that you do your research before you place a trade and do not have to analyze complicated technical indicators and signals in real-time and avoid confusion and make the wrong decision. You start to work on autopilot, and it becomes second nature to follow your trading system because you know it works due to statistical expectancy.
Discipline and risk management
Money management is an essential part of any successful forex trading strategy. Knowing how much money you are prepared to lose dictates the forex strategy and the path that you will follow.
If your strategy is to have just 1% of your capital at risk, as long as your stop-loss is reflective of this, you will remain true to your system even in volatile markets.