To be a successful forex trader you must be knowledgeable about the money market. You must also be aware of how you make decisions. Your first step in planning a trading strategy should be to know what kind of a trader you are.
No one will know better than you what type of trader you are. Various factors are counted in to determining this classification including your personality, how often you plan to monitor the market, and whether or not you want to take a hands on approach. Generally there are three different types that people fit into.
If you are considered a "Short Term" trader, than this basically means that you are an active, or day trader. You actively trade in an out of the market if you are a short term trader and trades could be just minutes or less in when it comes to the Forex market. Price fluctuation is how money is gained. Pip fluctuation is narrower in the Forex market and just a couple pips are where the profits are. Without the aid of a Forex robot you will have to be very vigilant of the market.
The time frames of mid term trading are not much longer than short term trading. Mid term traders will hold trades from as long as a few minutes to a few hours, but not much more than a day. As with short term trading, mid term traders profit on price fluctuations, but usually ride the momentum of the market a bit longer. These traders like to take profit frequently and then reassess the market before diving back in.
Long Term traders: These are usually not individual traders but large institutions or hedge funds. Trading positions can be held for long periods over weeks, months or more than a year. Since individual traders want to make profits quickly they do not prefer long time trading.
Irrespective of what kind of trading you opt for it is important to develop a good trading strategy and adhere to it. It would be wise to develop a particular trading strategy and become an expert in using it.
If you do not like the trading style that you started out with you may change it. However, make sure that you do not mix up short term trading with long term trading which requires expert handling. When you are new to forex trade it is always wise to stay with one particular trading strategy. Do not change your intention to trade short or mid term trade to long term trade. Keep to your trading strategy. If you find that it does not work, follow your exit strategy but never change your trading style which is based on the trade itself. If you do you will find that you get into trouble.
All styles of trading require discipline, including Forex trading. You must practice this discipline by choosing a trading style, creating the appropriate trading plan, developing it and sticking to the style.
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