By: Terry Allen
The methodology presented during this course will allow you to experiment in small increments of risk rather than jumping into a new system before knowing exactly what you are doing. If you intend to use a Forex Robot in scalping mode, this plan can also assist you in improving its performance by carefully adjusting its settings.
As you will begin to realise, my methodology is intended to enforce you to trade very carefully at low risk for many months. During this time, you will move away from a beginner’s mindset to that of a more business-like one. This effort will be worthwhile because at the end you will possess a trading strategy with a positive expectancy that will increase the possibilities of you gaining profits over the long haul. In addition, you will know how to make changes to your strategy in a carefully controlled manner.
In order to shape your own Forex Trading Strategy, let us first evaluate the impacts of some major Forex events that could affect this process. In doing so, you will gain an understanding of the size of the project in front of you as well as taking the initial steps in defining a trading strategy that will have a much better chance of working for you.
Fundamental Events occur when a Country releases key monthly data
that will be used by the rest of the world to assess the well-being and current performance of its economy. This information is released at pre-defined times during the month and can have a high, medium or low impact on the value of that Country’s currency in relation to others.
As the schedule of this data is known well in advance, in some respects, the releases are easier to deal with than those associated with the random events as described later in this course. However, caution is still advised as quite often a currency will spike in one direction shortly after the data release only to fully retract, if not by more, minutes afterwards.
This effect is usually caused by the Market grasping a snapshot understanding of the headlines associated with the release only to reverse its opinion shortly afterwards following a more detailed study of the small print. As such, movements, of hundreds of pips, can occur in both directions within minutes of the release. Unless you have insider information, you are well advised to stay well clear of such events, especially the high impact ones, as they can desecrate your budget very quickly.
This article is part of a course intended to show you how to develop your own successful trading strategy.
Disclosure: No Positions
By: Terry Allen