After you are done with selecting a perfect trading style for yourself, the next step is to find a trading strategy to that style. If you go out on the forex market looking for trading strategies, you will find a lot of them.

Everyone out there is trying to sell a forex trading strategy that comes with unrealistic promises of making huge money. Some of them even claim to have a holy grail strategy that never fails. 

Well, it doesn’t work like that. Most of them are just trying to make money by selling strategies because not all strategies work. There are only a handful of strategies that will help you make money in the forex market.

There are certain criteria that a good forex trading strategy should fulfill and I call this the blueprint for selecting the best forex trading strategies. These are: 

Risk to reward

The first criteria is risk to reward. I do not know why but I have noticed that majority of traders only talk about the win rate. Even if you go out to buy a strategy, you should bare in mind that most of them are selling trading strategies based on win rates. 

I am not saying that win rate is a bad thing but the most important thing is that the win rate doesn’t even show you 20% of the strategy. If I am to choose between a strategy with 80% win rate with no risk-to-reward and a strategy with 50% win rate and a risk to reward of 1:4, I will choose the 50% win rate and 1:4 risk to reward.

Consider  having a trading strategy with 80% win rate but no fixed risk to reward,what happens in this case is even if you win 80% of your trades and make a decent money, the 20% risk is you lose your account. You can blow up your money because the strategy doesn’t have a proper risk to reward ratio. 

The trading strategy should always have a high or decent amount of risk to reward ratio. If the risk to reward is low then you should at least know how much you are risking and what the rewards are. 

Risk Management Plan.

This is the most important thing for every forex trader. I have been trading for years and I barely see a single forex trader making money in forex who is not good with risk management.

Every trader out there excellently knows how to manage risk and that’s what makes them successful. So it is very important to choose a strategy that has it’s very own risk management plan. 

Multiple Setups

Many professional traders do not rely on single setups for placing a trade. They normally have multiple setups in a selected strategy and you must use it accordingly. You cannot wait for one setup, it can be too dull and can make you lose patience as well as make you do things that you shouldn’t be doing.

For example, if your strategy has only one kind of setup, then you’ll be tempted to enter a trade too early without the setup being confirmed. This can be very bad for your account, so always choose a strategy that has multiple setups.

Indicators 

Indicators are not loyal, a strategy should not be totally dependent on indicators. I am saying this based on experience, I am not saying indicators are useless or do not work. It does work, but then it needs some extra confirmation.

If you are trading with a strategy that requires you to enter a trade based on indictors only then you are in a big trouble. You need to understand the fact that indictors are made by humans and they are just available to improve trading. 

It isn’t a holy grail technique that’s going to ensure a 100% win rate. With that said, when choosing a strategy, make sure that it is not totally based on indictors.

Trade Management Plan 

Every strategy has a trade management plan that tells us when to enter and when to get out of a trade. A trade management plan helps you manage your trades properly, and works as a navigation system for you.

It guides you with different trading scenarios and helps you face them. The strategy you choose must have a proper trade management included. These are the important criteria you should consider when choosing a forex trading strategy.

How To Chose The Right Forex Broker

There a lot of brokers out there and every broker has something to offer their clients. But before you open an account in any of the available brokers, there are few things you should look out for before opening an account. 

Is the broker regulated? 

Now, imagine you made a million dollars trading forex but when you try to withdraw your fund, the broker denies you. This is one of the most common problems traders face.

Many brokers will offer you low spreads with low commission in addition to bonuses and more just to attract you. But when you try to withdraw your funds, they won’t allow you.

This only happens when you choose a broker that is not regulated. A broker you choose should be regulated by the governing body of the respective country. Each country has its own policies that takes care of brokers making sure they follow strict rules, and make sure there are no scam issues.

Type of trading strategy you use.

It is very important to choose a broker that suits your trading style. Some brokers offer commission based checkouts with low spreads while other brokers offer zero commission accounts with a little large spreads.

If you are a scalper or a day trader, you will need a broker that offers you low spreads. But if you are a swing or position trader, then spreads do not matter to you. In that case, you should choose a zero commission broker. Before you choose a broker, make sure you have this in mind 

Trading Platforms 

The next thing you have to look out for is the trading platform. The trading platform is the most important tool for any forex trader, so when choosing a broker, make sure you use the trading platform of your choice. 

Currency Pairs

There are different types of currency pairs like the major, minor and exotic. You can also trade metals in the forex market. So the broker must provide you with all the major, minor and exotic currency pairs.

Ease Of Money Transfer

Different brokers come with different deposit and withdrawal options. Only choose a broker that allows you to withdraw and deposit money through your medium of choice. 

Initial Deposit 

Many of you may be beginners in forex trading and a beginner should always start a live account with small amounts and then increase when they have enough experience.

Make sure you choose a broker that offer small initial deposits for opening a real account. This initial deposit should range anywhere between $10 to $100. 

This brings us to the end of this class, of you missed the previous class there will be a link to that below. Also, I have included a link to the full course to help you equip yourself as a complete beginner ready to be successful in the forex trading market.

Previous class: Forex Trading Styles | The Ultimate Guide Now

Full course: Forex for beginners