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I have always wondered whether there is a Master Key Trading Strategy that should work in All Market conditions. After All its all about price action. And there should be some way out that deals with it in a Universal way so that it comes out as a Winner everytime.
There is a general consensus that the Shorter the timeframe you are working in the more chances of errors. For me 1 min timeframe is too hot to handle. 5 mins timeframe is good for an early entry where as 15 min timeframe is a Standard practice for day trading.
The Master key trading strategy would have the following components for decision making.
(1) A fixed timeframe - If you change the time frames or have a look at too many timeframes there is scope for more confusion because the law of trading forces keep on changing based on timeframes and so will the Price targets that you are projecting will change.
(2) Frequent trades objective - Generally people are scared to perform too many trades because of the fear of failure. But speaking Mathematically if your trades are having a reasonable risk:rewards ratio then there is nothing to fear. Speaking very conservatively even if it is +1 pips for every trade. Then for every 10 trades you get +10 pips assuming you lose 70 percent of the trades with a risk reward ratio of 1 : 3. Assuming you just make 10 pips everday. Its still +200 pips every month and Double your Capital with a leverage of 1:50. I used an automated strategy successfully to double the capital in contest with just 15% success rate and a risk reward ratio of 1:9. That is called testing the extremes.
(3) A mathematical formula to calculate the most likely direction of the trade based upon the trading forces in action on a fixed timeframe. And also the Entry level Price target that should be hit frequently as well. Fibonacci retracements and BBands should be helpful useful tools.
(4) A risk management system to backup your main strategy just in case the things don't go as expected. I prefer a tight fixed SL. The definition of tight will change again based upon the timeframe you are using. Sometimes strange things happen in the middle of the trade. So moving your SL at an appropriate time is very important following the Safety first rule. Depending upon your projection targets you can move your SL to -2 or -5 initially when the trade has crossed +20 pips in profits. Or you can take profits in a Range bound Market and Re-enter.
(5) Identifying the huge opportunity in the middle of a trade and not exiting but redefining the Projection targets. Personally I am not a very good communicator but a very good gifted strategician. So I would recommend Expert consultations and Opinion exchanges amongst traders for revised projection targets. I think that is the beauty of being here at Dukascopy. )) Good Luck.
The only strategy that will work in forex, is not to rely on the same strategy for all the trades. You need to use different strategies for different market situations.
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