Forex-exchange for „ordinary“ People
Is forex trading really possible for everyone who is interested in the currency market? Yes, it is. But you have to create a specific trading strategy which is in line with other parts of your life, like your job, activities and especially your family.2 How to deal with forex market as an “ordinary” people
If you are not a professional full-time trader you have to fulfill your daily work, so your timeframe to act on the forex market will be relatively short in comparison to a professional trader, because you are on work for about eight or more hours.
As I was a student, I traded a lot. It doesn’t matter to me if there was on a daily chart, eight hour or five minutes timeframe. I was using the “parabolic SAR” to place my stops, this means I had to adjust my stop-loss every five minutes, half hour or whatever. Now I have to deal with a job and this strategy isn’t working anymore, because it is impossible for me, to trail the stops manually to the next point of the SAR.3 The magic of trailing-stops
What is the advantage of trailing stops? Of course, everyone knows that this little function turns your stop-loss-level in direction of the market, when the market is running in your favour. What you have to do is to create a strategy (an exit strategy) which will get hand in hand with your entry and your whole trading strategy.
Subsequently I will tell you how I have mastered this challenge. I don’t want to tell you factors, numbers or a complete strategy guide. I will only tell you how you can create an exit strategy with an underlying money-management system that will work for traders, who can not watch the forex exchange market the whole day. You will have to spend only a few minutes or hours a day for placing your orders.4 The trading strategy
Before you will step into a trade, think about it. What do you want to trade and what is your target of this trade? Is it a long term trend, a range, major breakout or only for scalping the market. This consideration is elementary for your strategy. If you have chosen your strategy for the trade, I suggest you to use an indicator for volatility measurement like “Average True Range” (ATR). You will need such an indicator in your strategy, because it is important to be save of the normal market volatility. If you are trading with more timeframes, like I do, I suggest you to use the ATR-value of your “big chart”.
What you now have to do sounds very easy but it isn’t as easy. Take the ATR-value and find several factors that are in line with your trading strategy. I will call the upcoming result x-ATR.
If you like to enter a trade in direction of a trend, your factor has to be higher than the factor you will need for range trading or scalping. This is because of the fact that you will stay in a trend-trade for a much longer time than for scalping or range trading.
When you enter a trade, calculate the entry price minus/plus (it depends on the direction of your trade, even if you go long or short) your x-ATR value. This will be your Stop-loss level for the trade. How you will get the trailing stop? It is very easy, you have to calculate the absolute value of your entry minus the stop-loss level you have calculated before.
Last but not least, you can and you should add this strategy to a money management strategy. You have an entry and exit point of your trade. Use these information and do not risk more than two percent (most common: 1%) of your capital for each trade and at the end you have the tools to be a successful "ordinary" trader.