The trading strategy is really important to make profit with consistency. Basically according to our trading understanding we the traders have to select our trading strategies. It would be really great if we choose the broker which is more appropriate to the concept of trading that will be used , the traders who are scalpers have to choose the broker which allows trading concept such as this.
That is quite true. However i believe if you a new forex trader, it is best to look into swing trading before scalping so that you have a better chance at no blowing your account while you perfect your strategy. Normally new traders have little to invest and they end up with accounts that have high spreads. one of the strategies I would advise for a new trader is trading on Divergence.
Choosing a trading system is very important since it is very subjective to the individual trader's trading psychology, risk tolerance and profit expectations and accordingly he has to choose the timeframe for trading as well as the type of trading system to use for his trading to meet all his requirements.
I agree with all that has been said above. Also, I would add that when picking a strategy a trader should remember two things - that he shouldn't be afraid to switch out a strategy that is not working and that he shouldn't try to fix things that aren't broken.
I feel a trader's trading strategy should be a reflection if his/her personality and background.
If you like taking big risks and thrive in an intense, almost chaotic environment, then perhaps a scalping strategy will suit you best. People who tend to be more extroverted and and have a sense of adventure will probably do well with scalping. But be warned, scalping on a demo account is exciting and a lot of fun. Doing this on a live account if you are inexperienced will be a wild emotional roller coaster, and a recipe for disaster.
If you have a great knack for managing your personal finance and are well disciplined with your savings, you may prefer a safer less-risky swing-trading strategy on larger time-frames like the 4-hour or daily charts. Most new traders will benefit from learning the basics first and then developing a personal trading strategy using market swings on the larger time-frames. It should teach you the patience and discipline to wait for the market to approach key support/resistance levels before entering or exiting a trade.
Then of course you have the investors. If you have a background in finance or business and understand the details of macro economics, then long investments would probably suit you best. Investing is more the art of analyzing economic and geo-political data to make investment decisions. Of course you will have to have substantial funds in you account, and be prepared to stick with your trades for weeks, months or even a few years.
Your background (work, social life) may also be key to understanding which trading strategy will suit you best. An engineer would enjoy the challenge of technical analysis, while an economist may prefer fundamental analysis. How much time do you have at your disposal? Limited time may warrant a 'set-and-forget' strategy like swing-trading. Scalping or active short-term swing trading requires more time. Are you trading part-time (do you have a day-job) or full-time?
I'm fortunate in that I work for myself. I have a small software development business. So basically I work from home on my projects, and it allows me to trade full-time. Due to my background as a programmer I prefer technical analysis over fundamental analysis, but I still prefer a swing-trading strategy. I also am constantly working on an automated system (EA's) to implement my manual trading strategy on my own web server (I develop eCommerce websites for my clients).
The point I'm trying to make here is this. You have to ask yourself a lot of questions regarding your personality, professional background, family life, available time, etc., and then sit and carefully decide which type of strategy will suit you best. Someone else's strategy may not work for you at all.
And take the advice from someone who paid his school fee's in trading. Over the last 7 years of doing this I realized that a trading strategy is not as important as a well developed trading plan. You will face many challenges in your trading career, try out many different trading strategies, face many emotions related to profits and losses. The only thing that can keep you profitable long-term, keep your sanity and not allow you to give up or worse blow up your account(s), is a trading plan. Think of it this way, the ONLY people who consistently make money in the long term, are people who treat trading as a business. And any successful business, anywhere in the world, has a well defined business plan. So your trading plan should be, in essence, your business plan.
Hello, I think we all have a strategy according to our knowledge and development in the subject, I would like to know your opinions about the difference between technical analysis and fundamental analysis?