A forex strategy is a disciplined method to optimize the risks that are involved while trading and at the same time making maximum profits out of the favorable trades by finding the suitable entry and exit points. There are many strategies that are right used in the forex market. All strategies that are right now existing are all developed by the forex traders themselves. Every forex trader should have his own forex strategy. Otherwise the trader cannot make any profits from the trade and in turn will loose the money in the trades. So a forex strategy is very important to a forex trader.

May be now you have a question that, then what is the relation between a forex strategy and an automated forex trading system? Am i right?

Then let’s come to the point.

Every one feels that just by making an automated forex trading system run all the time can make lots profits. But which is actually not true. Particularly the newbie’s feel that way and loose their money in the forex trades.

When you use an automated forex trading system you should have a strategy for yourself otherwise you cannot make profits with automated forex trading system.

Let me explain you a simple forex strategy. We will use a simple algorithm: when the price of the currency crosses above the 12-period SMA (Simple Moving Average), it will be taken as a signal to buy at the market. When the currency price crosses below the 12-period SMA (Simple Moving Average), it will be a signal to “Stop and Reverse” (“SAR”).  In other words, a long position will be liquidated and a short position will be established, both with market orders.  Thus this system will keep the traders “always in” the market – the trader will always have either a long or short position after the first signal. 

This a simple strategy where many forex traders use to make profits. Day to day the data of the simple moving average charts are available in internet at no cost. You can use this data to formulate your strategy. If you trade manually sticking to the above described strategy you will make some profits but not huge.

If you are using an automated forex trading system, then before making it run and trade for you, first of all find the point when the currency moves above the 12-period SMA. As and when you find the point then you turn on your automated forex trading system to make trades for you. Since automated forex trading systems are more accurate than the manual trading your automated system will make more profits taking every chance of dip and rise in the forex market from that point of itself.

This is how you need to apply your forex strategy with automated forex trading system to make more and consistent profits even while you sleep.

Source by Venu Modalavalasa