Efficiency of trading strategies is based on several factors, which, in their turn, have their own degree of importance. For example, any trading strategy should have prospects of the development and improvement. At the same time, some objective laws exist: no matter how perfect your strategy is, at hourly intervals there are more false signals than on daily ones, for instance. This is a fundamental factor. But first things first.
The most important feature of structure of the efficient Forex strategy is the right balance of two or three indicators that this strategy contains. If the strategy doesn’t include indicators, but is instead based on a candlestick analysis or trend lines, then the efficiency of this strategy is mostly based on personal skills of the trader.
Let’s consider an example of how efficient is trading using simple support-resistance lines at the long-term chart. The first thing worth mentioning in this case is several fundamental factors.
1. Long-term chart shows more disciplined movement almost without unpredictable "noise".
2. At these time intervals, the indicators very rarely give false signals.
3. Testing of highs, lows and trend lines has more weight in the dynamics of price movements.
Now we can make the first conclusion. To make efficient Forex strategies show good results, it is necessary, if possible, to move to a longer time period.
However, the priority is not always given to long-term trading. There are many other strategies that are very popular in intraday trading. Besides, intraday trading, despite the increased risks, can bring bigger money.
Some of the top-priority trading systems are those involving the use of oscillators on intraday time intervals. The best advantage of such trading systems is the presence of signals. However, efficient Forex strategies of this type have a sufficient number of signals – both false and true. And if the false signals are substantially filtered out, a trading system can be created that is categorized as aggressive. That is, given the frequency of accurate and real signals, your capital can be significantly increased with moderate risk.
The psychological factor can’t be missed when talking about efficiency. It is a kind of a key to the moneymaking mechanism. It means that any efficient strategy must be used by Forex trader who understands and accepts it. If it is a long-term strategy, or close to it, it is unlikely to generate revenue if used by daytraders. This is an important argument.
Actually, it is a very important argument. The best and most effective strategy is your own one. Efficient Forex strategies that were developed by you on your own will reflect your personality. Therefore, this argument has a fundamental nature, which must be in the structure strategy. And if, after you gain some experience and earn your first profit, you have a feeling that you miss something in the trading process, just start to change the approach. Switch to long-term deals and move towards larger time intervals, like weekly, monthly and annual. In such a way, your trading strategy will gradually become more efficient, due to the nature of the market. And you will gradually grow from a simple trader to an investor. Source: DewinforexSocial button for Joomla