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Strategy - a carefully thought over action plan for achieving a certain goal.
When it comes to financial markets, we define a trading strategy as a strict system of methods and criteria providing answers to the following questions:
The main goal of a Forex strategy is to make profit with as little fluctuation of the trading account as possible. It has to send a clear “Buy Signal” and “Sell Signal”.
There are two main methods of building Forex strategies:
Fundamental analysis uses discrimination and measurement of factors, which determine the real value of financial instruments. Such factors are the general economic and political conditions on the market. They influence the demand and supply of the products and services offered by this branch. If there is a fall in supply and the demand remains steadily the same, this will lead to increase in the market price. An increase in supply creates the opposite effect.
Technical analysis is primarily (but not exclusively) conducted by studying charts of past price and trading action. The technical analysis uses many different methods and tools, but they all rely on the assumption that price patterns and trends exist in markets. It identifies and exploits these patterns. It is not concerned with why a price is moving (e.g. poor earnings, difficult business environment, poor management, or other fundamentals) but rather with whether it is moving in a particular direction or in a particular chart pattern.
Technical analysis uses technical indicators, channels, support and resistance lines, Japanese candlesticks, fractals, Elliot waves, Fibonacci numbers and other techniques to predict the direction and force of the trend. Forex Strategy Builder Professional (FSB Pro) lets you build a trading strategy grounded on the principles of technical analysis, in particular the technical indicators. It provides easy to use menus with all the indicator parameters and logic rules. Without using mathematical formulas or scripts, you determine the points of entering and exiting the market and the market conditions for each type of operation.
When you change an indicator parameter or a logical condition, FSB Pro calculates and displays the trading result immediately. Right in front of your eyes a chart expresses your hypothetical account balance if you had traded, using the chosen strategy.
Because of the highly sophisticated methods of computing, the displayed results are maximally near to the real Forex dealing. Looking over the account chart, you can evaluate the strategy at once. If the chart is steadily increasing with minimum fluctuations, this means that the strategy is potentially good. The statistics and the journal records show you all aspects of the strategy's behavior.