The term Forex stands for foreign exchange. In the forex market there is no trading of stocks or commodities (eg oil). Goods in this market are individual national currencies . In other words, the forex market is a place where you can buy and sell dollars, euros, yen and other world currencies . In terms of volume of transactions, this market is the largest in the world.

For successful trading on the forex market there is the need to acquire and apply knowledge of the three basic areas, which are:

1. Business method, under which we will determine what, when and how to trade,
2. Money management, which we will determine the size of the traded positions
3. Psychology or how to avoid the pitfalls of forex markets and common mistakes.

First, we describe how to create your own trading method. Each business method is governed by a few basic rules that can be summarized into five steps:

1st Timeframe

The first thing you should consider is what type of trader you are, and what are your assumptions. Do you like quick results, or you can wait for the result of trade a few weeks or months?

Do you want to watch the charts every day or just at the end? These and similar questions will help determine the time frame (band), which you should trade, ie look for trading signals. For example, if you go to work during the day, it will be most convenient for you daily, weekly or even on a monthly time frame.

2nd Find indicators that lead to identifying a new trend

This objective relates to the first step trading methods - as soon as possible to identify trend.Indicators to help you with determining trends, there are hundreds. Few, however, of new traders can deal with them. To identify the trend it is most common to used moving averages and their crosses. Other indicators are used such as the MACD Reversal, or SAR, which is powered by software for each business.

3rd Find the indicator, which confirms the trend

This relates to the second step. The point is not to terminate unnecessary trade for short-term market fluctuations. This can help us further confirm a trend indicator. The same analysis can be used in multiple time frames, for example, when using the daily chart, determine the direction of the main trend and the lower bands, then look for suitable opportunities when entering the market. In addition, there are indicators and other tools that can perform the same function. These include trend lines, trend channels and more.

4th Define inputs and outputs

Some people like to start business immediately after signing of the indicators (such as a moving average crossover), although the daily candle (ie business day) is not over yet and there is still a possibility that at the end of the day the signal will no longer apply.
Others on the contrary, wait for the closing price (last trading price of the day), thus theoretically reduce the profit potential. Much more important than inputs are outputs from the market. When you quit, when you use the stop loss orders (to exit the market when it reaches the set amount of loss), or what do you do if the movement of the "mad", etc.

As a profitable area (out of business for profit), among others use support and resistance levels, or previous price peaks. Each business method should include precisely defined conditions, when to enter the trade, when to exit the trade. If you have defined the conditions under which to do so, you must follow, no matter what. It is non-compliance is the biggest weakness of all traders.

5th Write your own trading system on paper and follow it

This is an important step in creating methods. You have to write the rules down on paper and is ALWAYS respected. Discipline is one of the most important characteristics that the trader must have. No method will work and make money in forex, if you do not follow-programmed rules.