So let's follow another example: buy when price is lower than 3 last prices and sell when price is higher than 3 last prices.
That's an excellent example of strategy. It tells you exactly what to do and when to do it. As you probably suppose, there can be an infinite number of possible strategies. We can imagine any conditions which have to be met when buying or selling. But there's a secret: it's not so important what strategy you use, as long as you follow it tightly. The most common mistake is changing or quiting strategies because you "feel" that it will lead you to a loss. You have to remember that loss is a normal part of trading. Sometimes you lose, sometimes you gain. Good strategy is when your gains are higher than loses.
So now you know that "strategy" are the rules which tell you when to buy and when to sell and you have to follow it tightly without any emotions.
The example of a strategy given above has one shortcoming: it's not secure, which means it does not tell you when to quit if things go the wrong way and when to quit if thing are better than expected. That's why a well prepared strategy must also include the so called "stop loss" and "profit" parameters.
"Stop loss" and "profit" parameters are given in pips (please see Glossary if you're unsure what it is), which are just units of price. They tell you when to do an "emergency exit". If "stop loss" is 30 and profit is "20" it means that you should definitely quit your position when price is lower than the entering price minus 30 pips and also quit earlier if you already made 20 pips of profit.
If you're still unsure what's going on, read the very simple example given below.
Let's go back to Forex AutoMoney strategies. Those strategies are giving signals basing on continuous data from the Forex market. You should choose Weekly Strategy if you feel that all you can do is trade once a week. If you just want to sit in front of your computer once a week and use the signal - this strategy is for you.
Similarly, choose Daily Strategy if you want to trade once a day every day.
Intraday Strategy gives you the possibility of trading 6 times a day every day.
DO NOT USE MORE THAN ONE STRATEGY with one brokerage account.
in other words:
ALWAYS USE ONLY ONE STRATEGY with your brokerage account.
Usually it's not possible to trade with more than one strategy with one brokerage account.
A simple example:
- In the Daily Strategy you BUY 10 units of eur/usd at 8:00 AM
- Then, you're reading the Intraday Strategy at 10:00 AM and it tells you to SELL EUR/USD.
You decide to SELL 10 units of EUR/USD.
You had 10 items and you just sold them. You mixed strategies.
So either use only one strategy or open 3 separate accounts - each one for one strategy.
Of course these strategies are complete: they tell you when to buy or sell and what are "stop loss" and profit values.
So let's go to a practical example:
Let's say you want to use the Daily Strategy and you set up in your Account Settings that you want to get your signals on Monday at 3:00 PM of your local time.
Then, you should log in here about 2:59 PM and wait one minute. Exactly at 3:00 PM new signals will be generated.
Now, let's say you want to trade EUR/USD pair and you see the following on the signals page, in the "Daily Strategy" tab:
EUR/USD - BUY, Stop Loss: 41 pips, Get profit: 119 pips
Let's say EUR/USD value at 3:00PM is 1,3003. That means that at 3:00 PM you have to log in to your Forex account and place a "BUY" order at a price of 1,3003, set Stop Loss to 1,2962 (1,3003-0,0041) and Get Profit to 1,3122 (1,3003+0,0119).
To count Stop Loss value - SUBTRACT.
To count Get Profit value - ADD.
That's all.
Now the same, but with SELL signal:
EUR/USD - SELL, Stop Loss: 41 pips, Get profit: 119 pips
Like above - EUR/USD value at 3:00PM is 1,3003. That means that at 3:00 PM you have to log in to your Forex account and place a "SELL" order at a price of 1,3003, set Stop Loss to 1,3044 (1,3003+0,0041) and Get Profit to 1,2884 (1,3003-0,0119).
To count Stop Loss value - ADD.
To count Get Profit value - SUBTRACT.
That's all.
The trade will automatically be closed when the "stop loss" or "take profit" levels are reached or you should close it manually if the next signal is generated and it has the opposite direction. If it's the same type of order - you should keep the position opened and modify the trade by entering the new "stop loss" and "take profit" values basing on the current price.
