Creating A Forex Trading Strategy
In this section, we shall look at what it takes to create a profitable forex trading strategy. The trading strategy is the be all and end all of forex trading. When you find a method that works, everything changes, but to get to that stage is hard work. We shall explore here many varied aspects of finding a method and although some parts may appear irrelevant, they are vital to reach the final outcome. Creating a profitable trading strategy takes time and patience.
- The Scientific Forex Trading Method
“Forex currency trading is a science and those who are going to prosper will need to treat it as such. In this section, we shall investigate the underlying principles of a scientific forex strategy using the scientific method. We shall also dip into its relationship with chaos theory. The scientific method is based upon two principles…” - Prescriptive/Descriptive
“A scientific approach to studying the forex charts can lead to two types of forex trading strategy: prescriptive and descriptive…” - Real Forex Trading pt.1
“Forex trading is not investing, it is speculation. Investing is a reputable strategy to earn money, and it also is an important asset to the economy as a whole. Instigated by his Ph.D thesis in the sixties, Eugene Fama, developed a concept known as the efficient market hypothesis…” - Real Forex Trading pt.2
“We are now in a position where we can begin to construct a profitable forex trading strategy. Where should we start? Let us look at a graph and see what we can learn from it…” - Real Forex Trading pt.3
“Realizing that we need to explain what triggers a big movement in the forex graphs, this page will supply some suggestions regarding avenues that need exploring…” - Real Forex Trading pt.4
“This graph demonstrates the complications of constructing a forex trading strategy. One should not create rules that do not conform to the graphs. Just because a line exists, does not mean that the price cannot pass through it…” - Componential Analysis pt.1
“The scientific forex trading strategy states that the responsibility of a trader is to explain why a particular movement in a price took place. This explanation cannot be provided by a simple formula, rather one has to strain out many, many factors that led to the final outcome…” - Componential Analysis pt.2
“Imagine you do research and discover that your forex strategy means that if you trade a currency 10 pips after it has passed through its breakout line, it will earn you 30 pips guaranteed. What do you do?…” - Game Theory
“forex trading is a game. A game is a form of competitive activity and economists have spent their time studying this subject far too much! So much so that studying games is now a whole area of study in itself called game theory…”