How I Define my Forex Trading Strategy

My interest for Forex trading came to life more than a decade ago. Since then I have used a major effort to develop the Forex trading strategy I am operating today. It is important to handle a set of different market conditions. Certain conditions is present in the Forex spot market every day. Thus, with correct handling it will affect the daily results directly. As long as risk- and capital management is in place I like to think that one market condition necessarily doesn´t exclude the other.

The Philosophy of Building my Strategy

The strategy is based on price movements in the market. Therefore, there is one question more most important then others.  What is making the market price to change direction? In spite of many similar questions asked by others, I find the most relevant answer to be – supply and demand! Both fundamental and technical analysis can expose such conditions. It can also depend on price movements in different currency pairs. In total, oversold and overbought market conditions are in essence.

Time is money! It sounds like a cliche. However, the term “time is money” represent the most important pillar in my trading strategy. For the following reason; the strategy is monitoring a certain predefined number of currency pairs. At the same time it is also monitoring a predefined variety of market conditions. The market conditions are going over certain time frames dependent on that specific currency pair on that day. The belief is that one single miss on a specific condition is also a miss to bring additional profit.

Developing my Trading Strategy for the Forex Spot Market

Forex trading strategy

I currently develop my trading strategy for the professional market. Liongate Capital AG, with its subsidiaries, will come to the market with the relevant investment products. The strategy is also available via a managed account solution.

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The Cyclus of Executing a Market Order

The process I am using to execute a market order is described by the model below. As a result, all aspects of the trading strategy is defined and implemented:

Match of Conditions
Market Entry
Order Monitoring
Market Exit

The Forex trading strategy is using algorithmic trading to a certain extent. As a general principle the term “set and forget” will never be a part of my market activity. Algorithms can be set to fully automatic for so called normal market conditions. However, what will be the case for the “not normal” events? This I why, and for this purpose, automatic routines are excellent for monitoring and making trading decisions. The market entry is made by the algorithms in most cases too. But, if the conditions are unclear it will still be left to the human eye to decide.

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