When you browse the web in search of some guidelines to online trading, most of the content is supplied by platforms that will try as much as possible to persuade you to open an account with various brokers, be it in binary options or forex trading.

Now, when you get to the broker’s platform, some of the most notable messages go in the way of opening an account and receiving a bonus to launch your online trading career, while others suggest that you could become rich trading. Make no mistake; there are a lot of rich people out there who made money trading in forex.

However, if you were to ask them, the most common answer among them would be that they never did it overnight. Most importantly, they will emphasize the importance of planning even before opening your online trading account with a broker. This illustrates the concept of developing strategy when launching an online trading career.

So what is Strategy?

In Forex, strategy is basically a trading plan which involves the development of a framework upon which the trader can build trading decisions. Ideally, this process brings into play various aspects of trading such as instruments to trade in, markets, timeframes, risk/reward ratio targets, frequency of trading and which trading platform/broker to use, among others.

With strategy, a trader should be able to know what actions to revert to in case of unexpected huge losses on trades, as well as what percentage of profits to reinvest in the trading account and what to withdraw to a savings account.

A strategy also involves various technical aspects such as what indicators to use for trading and how to deal with market moving economic events. All of this should be part of the trading plan before setting up shop and should also allow for adjustments, because markets are dynamic.

Developing Strategy

When developing a Forex trading strategy, traders must consider various factors that could affect whichever plan they choose to follow. For instance, a full-time employee could find it difficult to do day trading, while a person without extensive knowledge in Forex may consider getting a money manager or an Expert Advisor system.

Additionally, those using trading platforms such as MT4 have an opportunity to develop their own Expert Advisors, while other platforms such as FXCM’s Trading Station 2.0 do not have such an option.

Furthermore, traders may also need to look at their financial situation. This is because some get in the Forex market with a goal of earning a living, while others just love the game because they already have enough in their coffers. Such factors may be crucial in determining the risk appetite of the trader, an aspect that is interwoven in the entire trading strategy.

Some traders also possess good knowledge of various trading instruments, for instance you could be very good in predicting equity prices and general market movements which means, trading Indices such FTSE 100, the Dow and NASDAQ 100 might be much easier for you. On the other hand, others are particularly good in certain currency pairs like EUR/USD or USD/JPY and as such would develop their strategy around those instruments.

Learn to Develop Strategy

Now that you have an idea of what to consider when developing a strategy, the next step would be learning how to bring all those factors together in a single trading plan. 

Therefore, this is the point where, as a trader, you may need to learn a few ideas on how to get the plan up and running from various experts. There are several platforms that encourage aspiring traders to learn forex trading down from the basics all the way up.

In strategy development, this is vital, because without the basics you are likely to get lost in the middle of the plan. As mentioned earlier, it all goes down to you the trader. This is because what suits you may not suit another trader with a bigger pocket, or one with a special expertise in stocks etc.

Therefore, this is why even sometimes getting a personal coach to enhance what you already possess in terms of expertise as well as capital sources and availability could play a major part in getting you the right trading strategy.

Can you learn this all by yourself? Well, it is possible, but it could be much difficult than when compared to consulting with a forex trading expert for advice.

Conclusion

The bottom line is that as an aspiring forex trader, you will be tempted into rushing to open a live trading account because of the overwhelming promise that people are making money trading Forex. However, while this is true, it is also true that many tend to drop out of the game before even getting started.

This happens when they do not come up with a clear trading strategy at the beginning. Therefore, to avoid becoming the next victim, it is good to take it step by step and if possible learn forex trading right from the start if you are totally a newbie.