If you want to make money in forex trading you need to have a soundly based forex trading strategy. This is far easier to achieve than many traders think it is and here we will show you how to build one in 4 simple steps.

1. Success Comes From Inner Understanding

To succeed at forex trading you need to do it on your own and understand EXACTLY how and why your system works.

Even if you follow a vendor or someone else’s currency trading system, you can’t simply follow it you must learn it and have confidence in it.

If you don’t understand how your trading system will help you succeed, you won’t have confidence in it which will lead to a break down of discipline if you hit a losing period.

Keep in mind if you don’t have the discipline to follow your trading method, you don’t have a method!

2. Keep It Simple & Work Smart

Many traders believe the more effort they put into their forex trading strategy the more they will make – this is not true. You get rewarded for being right with your trading signal and that’s it.

Other traders think the more complicated their system is the more chance it has of succeeding but again – this is not true.

All the best forex trading systems are simple and this means they have fewer elements to break and are more robust in the face of brutal market conditions.

This is actually good news, as you need to work smart and not hard to succeed.

Simply focus on the right areas and learn them. If you do this, it will lead you to currency trading success.

3. A Successful Trading System

Here we can’t give you all that goes into a successful trading system – but we will give you some important basic elements you need to keep in mind when building one.

- Do not day trade, as you are guaranteed to lose. All short term volatility is random and you cannot get the odds on your side, either swing trade or follow long term trends.

- Base your system on the concept of support and resistance and breakout methodology.

- Do not predict with your system. Use momentum oscillators to confirm each and every trading signal.

If you predict that’s simply hoping or guessing and you won’t win.

Trade the truth of price action and confirm.

- Always place stops and assume the worst eventuality – you need to protect what you have above all else. As one trader I once knew said:

“If you take care of the losses the profits will look after themselves”.

4. The crucial Point You Need to Understand!

In forex trading 95% of traders lose.

This is simply in most instances down to the fact they don’t work smart and learn the right information.

They therefore don’t have confidence to apply their system with discipline.

You need to understand as part of your forex education that your method is important – but you need the right mindset to apply it.

If you want to learn currency trading you can, in fact anyone can – but you must learn how to trade currencies the right way and build a logical, simple forex trading strategy which, takes into account all the points we have made above.

Part of developing a profitable Forex trading strategy involves being able to determine market volatility. The Forex market is open 24 hours per day and you will find it impossible to keep track of all market activities, all the time. You will need to understand the timing of various markets, particularly those in which you are trading and those that influence your trades, so that you are in a position to make the best possible decisions during your trading hours.

Different markets are affected by differing market conditions. All currency pairs are subject to market volatility, but most currencies tend to become more or less volatile during certain times of the day. As a trader, you will need to have some knowledge of the currency trading system, currency pairings in different times zones and the conditions that affect their volatility.

The London market is the largest and most volatile Forex market in the world since some of the largest dealing desks of large banks are located there and transactions that take place usually involve large sums of money. The London market share is about 30% of all markets. The market hours are from 2 am to 12 pm EST, which is also the time for which most transactions are completed. The benchmark established for volatility is 80 pips and more than half of the London market currency pairings are likely to reach in excess of 80 pips. It would not be uncommon for the daily range of GBP/CHF and GBP/JPY currency pairs to average more than 140 pips. The ability of these currency pairs to generate huge profits in a short amount of time appeals to traders willing to take risks in the currency trading system.

Since most large market participants complete their circle of currency conversions during the London market hours, daily trade activities peak during this time, causing high volatility. Near the end of the London trading session most large investors will convert their European assets to US dollar assets in anticipation of the opening of the US market. This conversion is responsible for the increased volatility in GBP/CHF and GBP/JPY currency pairs. The New York trading session is the benchmark for US trading and it represents the second largest FOREX market. Trading hours are from 8 am and 5 pm EST. The majority of transactions occur in the US market from 8 am to noon EST. During this timeframe, the European market is still in session, which creates a market of high liquidity. Trading during this period of overlap accounts for about 70% of the currency pair trading in the European session and about 80% of currency pair trading in the US session.

Other currency pairs that appeal to high-risk traders during the London market hours include the USD/CHF, GBP/USD, USD/CAD and EUR/USD currency pairs. It is not uncommon for these pairs to reach a daily range of about 100 pips. This level of volatility creates opportunities for entry into the market. In contrast, is not uncommon for the AUD/JPY, EUR/CHF, AUD/USD and NZD/USD currency pairs to reach a daily range of about 50 pips. This level of volatility is more appealing to traders who attempt to avoid risks. The level of volatility indicates that these pairs may be less likely to create a loss.

The London market also overlaps with the Asian market. The Tokyo trading session is the benchmark for the Asian market. Trading hours are from 7 pm and 4 am EST. Large investors take positions in the Tokyo market in anticipation of the opening of the London session. The GBP/CHF and GBP/JPY currency pairs are also highly volatile during this timeframe of overlap. Trading during the period of overlap, which is between 2 am and 4 am, is the lowest of any trading session. Traders use these slow trading hours to position themselves for the opening of the European or US market.

By: Andrew Daigle

These days currency trading has become one of the major areas where more number of people invest to reap the maximum benefits from the market. Many people take Forex trading as one of their main hobbies that earns them a lot of money and also helps them to understand currency trading and the strategies to become a successful trader of foreign exchange. The basic idea of forex trading is that in this type of trading the currency of one nation is exchanged with the currency of another country and in the way, the trader gains profit from the transaction due to ever-changing exchange rates.

There are various aspects of Forex trading that one needs to understand, if one wants to gain from them. Currency trading system, Forex trading strategies, Forex trading signals and the Forex alerts are some of the major factors helping the market to gain a considerable profit through trading volumes.

Forex is the largest exchange of foreign currency that is considered as one of the transnational markets frequently rising. There is a possibility for everyone from all across the globe to participate in Forex trading with the help of the omnipresent catalyst – the World Wide Web. The main strategy behind Forex trading is that if there is an increase in the values of currency previously bought as compared to the values of the currencies that are on sale, the trader gains from the trade otherwise he incurs a loss. The Forex trading market is ever fluctuating and there are various aspects that the traders need to understand and keep in mind, if s/he has to gain from the market.

There are various strategies that the trader trading in the foreign exchange must keep in mind. Some of the main strategies are the following:

It is essential for the traders to understand the foreign exchange rules and regulations along with a clear idea of the possible dangers of the trading before plunging into the forex trading. It is also imperative that the traders adopt reliable and effective forex trading strategies to make sure that they are on the safe side of the trading perils. You must remember to use low cost software to implement the forex trading strategies. This is a wise decision as it helps you in good money management. By taking the various available options for the trade, they can derive resistance and support levels.

Keep the above in mind and make your killing in the Forex market.

By: Jonathan Gibson