Need help becoming profitable? Watch this interview, where Jarratt reveals THE EDGE, which got him #2 ranking: http://www.jarrattdavis.com/forex-course How to build the best Forex Trading Strategy? The best approach to building a successful trading strategy; naturally I’m referring specifically to a successful trading strategy that reaps consistent profit. The most appropriate way of doing this is to layer your strategy, similar to building a house your first goal should always be to dig the foundations, then you need to build the walls and finally construct the roof and as with building a house it’s imperative to follow that order as you couldn’t hope to place the roof on without the appropriate walls and foundations. So what’s the first layer in my strategy, for me it will always be to have a solid grasp of the fundamentals. Understanding what’s moving the markets, understanding which currencies are likely to move in which direction and most importantly the reasons why. You need to know at all times regardless of which currency or pair, or whichever way it has moved, yes, recognize that it has moved but find out why. This will give you insight into the markets and understanding, but most importantly it will give you confidence in your trading, this is the first layer. To demonstrate this if you have ever swapped strategies and employed different approaches and continually tried different systems, this is the key issue a lack of confidence as you haven’t had a definitive grasp of the fundamentals. The second layer is to have a method of entering the markets and managing your positions that makes sense to you. For example I use technical analysis, allot of people seem to think I’m opposed to using technical analysis, this isn’t the case I’m opposed to using technical’s as the sole basis for placing my trades. There are some traders out there that will look at a chart and attempt to use that as an indicator to which direction the market will go. I rely strongly on technical analysis but only once I have a strong grasp of the fundamentals. How I use technical analysis is via support and resistance, for example if I’m looking at GBP/USD and I’m looking for it to up, I won’t just buy it I will look at the charts and ask myself where has the market been buying it from, this is support. This will be clearly visible on the chart where you can see it has consistently come down and gone back up, look for these obvious places as indicators where to place a trade. In addition to this I use figures i.e. double zero levels; 1.6700, 16800, 16600 in addition to his the fifty levels are quite powerful too 1.6750, 1.6850 etc. Combine this with Fibonacci, put a fib on the spread so that you have nice retracement levels, so that you have a clear view of nice previous levels of support overlapping a Fibonacci retracement level. This should give you a clear indication as to where the market has been buying and selling and a clear entry point as to where to enter a trade. You can employ this same technique when placing stop losses, so you have a clear indication of where the market has been hitting support you can place your stop loss just below that, the same principle goes for profit targets. So if the price has rallied up and then pulled back and returned again to old highs that’s basically where I look to take my profit. Support and resistance is just the system I use yours doesn’t have to be the same, some people use black box systems or simply have their own ,that’s fine. As long as you are comfortable with it and it is used in conjunction with the first layer which is analysis of the fundamentals.
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