Trading Strategies and Customized Strategies

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Trading Strategies and Customized Strategies

Fifty Fifth session of Forex Training

Welcome to Forex professional training in financial markets.

In this session we will discuss in detail Trading Strategies and Customized Strategies.

Trading Strategy

The trading behaviour is based on a fixed method through using Fundamental and Technical analysis as well as patterns, candles and lines with certain circumstances.

Learning and practicing each of the Technical tools, mentioned in previous sessions, alongside studying of their applications and procedures are the prerequisites of creating a strategy.

Trading Strategies and Customized Strategies - Technical and Fundamental Analysis

After learning and studying all of the tools, trader can make a simple strategy which can be developed afterwards.

Trader can customise a simple strategy or he/she can utilized suitable developed strategies available on the internet and then personalize them for their own convenience.

Trading Strategy Types

Strategies can be classified into the following categories:

  1. Trend strategies: These strategies can be exploited on market trends. So traders should apply Oscillators, like CCI, as well as breaking patterns to develop a trend strategy.
  2. Range strategies: Mostly used in range markets in which price fluctuates in a horizontal channel.
  3. Reverse strategies: These strategies can be formed in reversal points and pivots. Those traders who desire to find reversal points at the end of a trend to place a Sell order at the end of uptrend or a Buy order at the end of a downtrend.

Trading Strategies and Customized Strategies - Different Types, Trend, Range and Reverse

Customising Trading Strategies

Trader can customise or personalize a plain or a developed strategy based on his/her trading behaviour to fulfil the desired trading method.

If a trader wants to trade by a developed strategy which was designed by another trader, then he/she must follow trading behaviour and method of the developer otherwise he/she must personalize the developed strategy.

For example, a trader prefers to use the Stochastic pattern, while other person may use RSI to identify the reversal points on a trend.

On the other hand, there may be some strategies which trader cannot replace.

Trading Strategies and Customized Strategies - RSI Relative Strength Index - Stochastic Pattern

Trading Strategy Test

Trader can examine the planned strategy on a Demo account by placing several orders.

A strategy may have multiple conditions that can generate different confirmations and signals.

So trader can place orders based on signals from the strategy which can generate a signal with several confirmations.

The success coefficient of any strategy should be recorded after each utilization on an order.

For example, the ratio of success on a certain number of orders with specified amount of confirmations.

Traders should apply each strategy on 40 to 60 orders to consider the ratio of prosperity against failure to determine if the given strategy is suitable.

For example, after a certain strategy test, trader could derive the ratio of its successful orders;

Trading Strategies and Customized Strategies - Success Rate of Trading Orders by Confirmations

The overall ratio of success over failure equals 70%.

  • 1st condition ( Minimum confirmations) = 65%
  • 2nd condition = 72%
  • 3rd condition = 77%
  • 4th condition ( Maximum confirmations) = 84%

The efficiency of the given strategy increased as there were more confirmations.

Trading Strategies and Customized Strategies - Different Ration and Conditions - Confirmations of Trades

Trader can utilize some strategies concurrently to detect spots with more confirmations for higher rate of success over failure.

A sole strategy may give fewer signals, while using 2 or 3 strategies simultaneously would generate more signals with better confirmations.

Trader must never utilize strategies without Stop Loss indicator, since any strategy would generate false signals that may result in a “Margin Call”.

Those strategies with a longer Stop Loss price rather than Take Profit may be unprofitable, since every SL would equal to 5 or 6 TP prices.

Even a Strategy with an efficiency of 90% would be unprofitable if SL price is considerably higher than TP price.

Trader must never place an order without a strategy or signals and confirmations from applied strategy.

Those traders who do not place an order on the exact points confirmed by strategies would lose their capital eventually.

Trading Strategies and Customized Strategies - Margin Call - Entry Price - Failure Signals and Analysis

Trading Strategy Components

Each strategy provides the following issues:

  1. Suitable entry price
  2. Take Profit price
  3. Stop Loss price
  4. Close conditions of an order under special circumstances. Sometimes trader must close an order, which is proceeding toward SL price, despite previous confirmations.
  5. Multiple Confirmations on a spot as well as several conditions with different efficiency.

That concludes this session, until next time and another session take care.

Linkages & Notices

Kindly visit 55th session: Different and Personalized Trading Strategies on Financial Video Tutorial section to watch video format of Trading Strategies and Customized Strategies.

You can find Different and Personalized Trading Strategies video on PForex YouTube Channel.

PForex Educational materials in text and video formats are developed by PForex Department of Education to enhance and improve investors’ knowledge and trading skills. Due to high risks and volatile fluctuations in financial markets, traders and investors must develop their trading skills and knowledge. It is strongly recommended to apply Risk and Capital Management when trading in financial market

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