- Intraday strategy
- Daily strategy
- Weekly strategy
What is a "strategy"? When you invest in Forex (like in stocks) you have to follow some rules. The most simple one is "I will buy when it's cheap and I will sell when it's expensive". But this is not so obvious. How do you know if it's cheap? Maybe tomorrow it will be even cheaper? So you have to have a strategy which tells you WHEN it's cheap and WHEN it's expensive.
So let's follow another example: buy when price is lower than 3 last prices and sell when price is higher than 3 last prices.
That's an excellent example of strategy. It tells you exactly what to do and when to do it. As you probably suppose, there can be an infinite number of possible strategies. We can imagine any conditions which have to be met when buying or selling. But there's a secret: it's not so important what strategy you use, as long as you follow it tightly. The most common mistake is changing or quiting strategies because you "feel" that it will lead you to a loss. You have to remember that loss is a normal part of trading. Sometimes you lose, sometimes you gain. Good strategy is when your gains are higher than loses.
So now you know that "strategy" are the rules which tell you when to buy and when to sell and you have to follow it tightly without any emotions.
The example of a strategy given above has one shortcoming: it's not secure, which means it does not tell you when to quit if things go the wrong way and when to quit if thing are better than expected. That's why a well prepared strategy must also include the so called "stop loss" and "profit" parameters.
"Stop loss" and "profit" parameters are given in pips, which are just units of price. They tell you when to do an "emergency exit". If "stop loss" is 30 and profit is "20" it means that you should definitely quit your position when price is lower than the entering price minus 30 pips and also quit earlier if you already made 20 pips of profit.
