Financial markets provide unique opportunities for those who want to become a trader. But before you start trading, you need to master the basics of strategies that help you build a systematic approach and consistently make a profit. In this review, we will look at the fundamental principles of system trading.

What is a trading strategy?

Trading strategy is a clear action plan that shows how you will analyze the market, make trading decisions, and manage your trades. It includes the choice of currency pairs, time intervals for analysis, the use of means and methods of checking the market, risk and profit management, as well as criteria for entering and exiting a transaction.

Key elements of a trading strategy:

• ◆ The choice of currency pairs for trading on the market. The first step in creating a strategy is to select the currency pairs that you will work with. It can be the main money pairs such as EUR/USD or GBP/USD, it can also be cross-currency pairs, EUR/JPY or AUD/CAD. It is important to choose the currency pairs that match your goals and strategy.
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• ◆ Time intervals. The next step is to select time intervals for market analysis. Depending on the trading style, these can be long-term, medium-term, or short-term time intervals. Some traders like to analyze the market with daily and weekly charts, others with hourly or even minute charts.
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• ͏◆ Methods of market analysis. Then you need to find out which methods of market analysis will be used, technical, fundamental, or a combination of them. Technical analysis is based on the study of charts and indicators, such as moving averages and indicators. Fundamental analysis depends on economic data and global global events.
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• ◆ Entry and exit criteria. It is important to set the criteria for entering and exiting trades in advance. These can be specific patterns on the chart, indicator signals, or a fundamental market event. A well-defined criterion helps to avoid emotional decisions and maintain discipline.
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• ◆ Risk and profit management. The main point is to choose the position size, stop loss level and percentage of risk and profit for each trade. A good risk management strategy is needed to protect capital and reduce potential losses.

Gradation of strategies by time criterion

• ◈ Long-term strategies are those in which transactions last for several months and are based on an analysis of long-term trends. They can be based on both technical and fundamental analysis.
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• ◈ Medium-term strategies are those in which trades are held for several days or weeks. Medium-term strategies can include both technical and fundamental analysis, as well as risk and profit management strategies.
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• ◈ Intraday strategies - in which transactions are opened and closed within one trading day. They are usually based on technical analysis and involve a lot of transactions per day.
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• ◈ Scalping. This is the most short-term type of strategy, where trades are held from a few seconds to several minutes. The strategy needs a quick reaction and a strict risk and profit management system.

As a result, it is worth noting that the creation and application of trading strategies is an important prerequisite for successful Forex trading.

Understanding the basic concepts and principles of trading strategies will help you make informed decisions and confidently achieve financial goals.

Regardless of the trading method you choose and the goals you set, it is very important to have a clear plan of action and a disciplined approach to trading.