Plan on trading strategy
The core of the plan is a strategy. In forex trading strategy is the core of the rules for entry and exit. Almost all of the forex trading strategies leads to three types, namely:
- Breakout, or the start of a new trend after the consolidation or sideways movement which tends (ranging). Traders usually entry after prices broke through key levels (support and resistance are strong).
- Retracement, or short-term correction, but the direction of the long-term trend has not changed. Traders usually entered when the correction ends by following the direction of the main trend.
- Reversal, or reversal of a trend toward either the short, medium or long term. Traders usually no entry after reversal signal is completely valid.
A rule for entry and exit is a standard provision regarding the characteristics of price movements that can help you identify the most appropriate state to enter and exit the market. The signal is a specific condition that meets all or most of the rules that you set as your trading trigger. So the plan for entry and exit must be based on the rules and signals. In this article are not described in detail the types of strategies, but exemplified outline only.
Some questions that can help in making a plan of trading strategies, among others:
Rules for entry:
1 What are the rules that you set for entry?
2 In what ways do you make the rules?
3 trading signals as to what will trigger you to entry?
Rules for exit:
1 What are the rules that you set for exit?
2 Trading signals such as what would warn you to immediately exit?
3 How do you determine a target profit on each trade?
4 Are you using a mechanism for meproteksi profit (ie trailing stop)?
Examples of answers:
Rules for entry:
My strategy is to follow the direction of the trend (trend following), therefore I will be an entry in the direction of the trend is going to refer to a small retracement or correction occurs. This method is commonly called the moving average bounce. I will entry after correction ends and the price starts to move in the direction of the trend.
I often trade on EUR / USD on a one hour time frame (H1), and the rules of entry that I made is based on the trend of the couple through the indicator simple moving average (sma) periods of 100 and 200 on the H1. I assume the trend is up (or down) if the price is above (or below) the second line of the sma. If you already know the direction of the trend on H1, I will wait for the second setup through sma 100 and 200 on the 5 minute time frame (M5).
If the EUR / USD has retraced (to correction) in the direction of the line 100 sma on M5, then I wait until the price reverses back or bounce (bounce). I will entry buy (or sell) when the EUR / USD bounces towards the top (or bottom) of the 100 sma line on M5 time frame.
Rules for exit:
If I have entered buy (or sell) and continue in the direction it turns retracement line 200 sma (opposite me), I will exit at the level of 15 pips below (or above) 200 sma lines usually stop loss level with this method the amount of approximately 50 pips.
I set profit target is 50 pips, and I will use the technique of trailing stop after profit 15 pips.
