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Why you need to create your own trading strategy?
Written by: PaxForex analytics dept - Friday, 27 November 2015 0 comments
A trading strategy is a set of rules that help a trader make decisions in the market. It takes away subjective judgment and guessing. A strategy is based on an edge and the rules identify when that edge in the market is present. What are the best conditions in order to enter the market? What are the best conditions in order to exit the market, i.e. where are your stop losses and profit targets.
There are many trading systems and strategies out there. There are many free ones printed in trading articles, journals, books and on trading-related websites. You can buy them as software or you can subscribe to them periodically. Novice traders say they do not have the time, the aptitude, the talent nor the brains to work out how to trade properly. They would rather purchase a program or subscribe to a trading system for hundreds — or in some cases — thousands of dollars.
Forex trading is all about eliminating the losing trades and achieving more of the winning ones. This tends to be achieved through the development of successful forex trading strategies. With the help of these strategies, a trader can develop a set of rules to follow that will allow them to gain the most benefits from forex trading. Quite often traders will rely on trading
strategies that haven't been tested thoroughly, leaving them at a loss.
When someone else develops a system for you, you don't know what biases they might have. Most system development software is designed because people want to know the perfect answer to the markets. They want to be able to predict the markets perfectly. You can buy software now for a few hundred dollars that will allow you to overlay numerous studies over past market data. Within a few minutes, you can begin to think that the markets are perfectly predictable—a dangerous belief that will stay with you until you attempt to trade the real market instead of the historically optimized market. Many trading accounts have ended up plummeting because of this very thinking.
Every trader needs a strategy or system to form a framework for their trading. Without a repeatable way to identify and execute trades, you can never be a consistent performer. Basically, your system is a roadmap that guides your trading and keeps you from making decisions when you are least able to do so. Trading can be stressful. It's easy to get distracted. Life goes on regardless of what the market is doing. If you hear news about the market changing, or you're running late for your next appointment, you are not likely to make good decisions about your trades.