Forex Trading Strategy - Common Mistakes in Formulating Forex Trading Strategy

In any business endeavor, an activity undertaken without a proper plan is doomed to failure. A proper plan will have two parts: the first called objective is what you a're trying to achieve and a second called strategy is how you are going to achieve your objective. Similarly in Forex trading, unless you have an objective and a strategy, you are probably going to end up losing money.




A good starting point is to examine what you should not be doing and to learn from the mistakes that other people will make. First is to have dreams of getting rich quick all becoming a millionaire overnight. Forex trading is not a lottery or a horse race where you ride your luck. Only a long-term commitment and an objective of early realistically turns, where the gains outweigh the losses can be a good basis for planning.



This has to be reinforced by diligent homework to keep abreast of the financial and economic news that will affect the currencies that you are going to trade. Good information, when combined with technical analysis can provide useful pointers on which way prices are going to tend.



The second mistake that people often make is to let emotions interfere with the execution of a sound strategy. It is easy to get carried away by your feelings has become emotionally attached to the positions that should have been closed out quickly. This is the surest way to taking unsustainable losses. The very purpose of a plan is to foresee eventualities and prepare for them to protect yourself. For instance when you set a stop loss on a particular position, you have logically determined how much you can afford to lose on that particular deal. Trading discipline therefore demands that if this limit is reached, you close your position immediately, regardless of your feelings.



If you have prepared a proper plan implementation becomes critical and your best bet is to get a Forex robot that you feel comfortable with. The robot will watch and analyze the markets for you and execute your stop loss and take profit settings with perfect timing and precision.