Forex trading market is divided in 3 main situations : breakout trading, range trading and trend trading.
Range trading usually is occur during quiet markets. The resistance and support that determine ranges become broken when market price breaks out.
Breakouts trading can be very volatile and breakouts trading strategies need to be made separately than trend or rang trading strategy in regards to money management.
After a Forex trader has picked which market situation , then they need to choose which time frames they want to trade.
How to Entering the Trade
Now we start to sett how the Forex trader will be entering positions. As we mentioned before , resistance and support levels can determine range trading, thereby a Forex trader can use this as entry point in their trading system strategy.
After a Forex trader has determined the support and resistance levels , then they need to look a method to define the strength of market price moves. In this case we can use concepts of multiple time frame analysis and price action method to help Forex traders look that they can define how strong a trend.
Risk and Money Management
Risk management is the importance part in how to build Forex trading strategy. There are many Forex traders may win more often then they lose. In this section we talk about using risk and reward ratios in which the Forex trader stands to make more profits if their trading are right than they could lose if their trading are wrong.
When to use Your Forex Trading Strategy
The Forex market is trade 24 hours a day , The Asian session is usually traded slower price action, liquidity begins coming in from London session.
With adherence to support and resistance and less potential for big moves, may be better traded by focusing their entries on the Asian session, and support and resistance can be broken much more easily coming from London session.
The United States session is considered the overlap market, when both London and New York market are trading. The volatility high, as the potential for reversals can denigrate even the strongest range strategies.
