I want to ask you a question.
What do you think it has been the most important concept in this course? I can already imagine you saying:
reading the market with the candlesticks or how to place Stop-Loss and take profit correctly.
But in my opinion the answer is another one.
The most important concept is that there is not a standard situation that always happens on the market.
Every scenario is different and needs to be analyzed on its own.
This is the reason why this lecture is called How to Build a trading strategy and not how to build a
trading system.
You want to have a strategy to consider some entries
when you analyze the chart, but you don't want to have a system that is made by a bunch of rules that
you always apply regardless what the market is really saying.
Having said that, you are three steps away from building your own strategy.
Step one is: choose the correct timeframe for you.
You can be a scalper, you can be a day trader, you can be a swing trader or you can be a position trader.
It doesn't matter.
You are the only one that can decide which time frame suits you better.
We have already talked about the timeframe so I'm not going any further and we can jump to the second
step.
The second step is choosing your weapons to face the markets.
We have seen everything possible about the candlesticks. So candlestick patterns will be a huge weapon
by your side to win the war against the market.
Do you want to have something more on your chart to filter the signals?
Well, sure, you can do it.
Go on.
We have seen the moving average, we have seen the relative strength index, we have also analyzed different
settings for these indicators.
A common mistake is to think that the more, the better
when choosing how many indicators to use. Do you think that something like this is better than something
like this?
You should use whatever can help you to analyze the market, but this doesn't necessarily mean that you
will have a better understanding of the market
if you use more indicators. There are many expert traders that only use the candlesticks to trade.
They don't use any other tool. It's just a matter of finding out what is the best set up for you.
Step three is: write down your money management rules.
For example, I never risk more than 1 percent per trade and I never choose a risk to reward below one to
one.
How you manage your account and your risk plays a fundamental part in your strategy.
So make sure to spend time to define your rules. So you've got three steps to build your own strategy
and honestly you don't need to be Einstein to come out with a strategy that works.
But then, how to proceed?
Are you going to invest $50,000 on this strategy?
Of course not.
You need to test your trading strategy.
The easiest way is to open your Meta trader, go back in time with your chart and then move the chart
forward,
starting to analyze all the positions that you would have taken in the past.
Record your results and be honest with yourself.
At the end, when you have your final results, if you're happy with that, you can go on and use that strategy
with a Demo account for a couple of months.
Trading with the demo account will put you in a different situation because now you're dealing with
a market that is moving.
If your results are still good after a couple of months of demo trading, then you can start with a
real account.