How to start creating your own trading strategies?

According to opinion of many trader that For starting your own strategy you should have at least at least 2 years experience on forex market. Before that you are not ready!

I would disagree with that. A person might need 2 years to become profitable, but that's no reason to not try to develop your own strategy as soon as you get a general idea of how the market works.

You can only sit around reading what others have written for so long. At some point, you've got to try implementing ideas. These can be ideas from others, or they can be your own. Sitting around thinking "I haven't traded for 2 years, so I'm too ignorant to try anything on my own" isn't going to make you a successful trader.

What kills most people's accounts is poor risk management, not bad ideas on when to open and close trades.

Naturally, all new strategies, no matter what the source, should be tested on demo first.

Maybe I just missed smth - if we are talking about experimental strategies, you can start creating them on your first day of trading... but if we are talking about really working strategies (also with intelligent risk management) - they just cannot be generated without rich experience (it is just my opinion)

How much money do I need to start trading?

Depending on the amount your broker requires for margin, you can start trading with an amount as low as $500. Remember that starting out with low trading capital may put you at disadvantage because you will only be able to trade forex in small share lot sizes.
Howerver, don't wait until you have hundreds of thousands of dollars. First, trade a demo account or two (or three) until you are comfortable with the platform and can show at least some signs of being profitable. Then open an account with a broker that lets you trade microlots or nanolots. This will let you get live trading experience with less than $500 at risk.

How to instantly improve your forex trading performance and move it to the professional level

Group A (73%) Losing. Jumping from one forex robot to another, sometimes trying to trade on their own by following some complicated strategy, or even placing trades on a hunch...

Group B (16%) Somehow managing to break even. Using one or two strategies, however not enough confidence to follow the rules. As they claim "the strategies were not consistent enough" so they would sometimes "break a rule, here and there"...

Group C (7%) Placing long term trades, watching the news at all times, having trouble sleeping, as one economic report or change of goverment in some country would rapidly turn their forex position into a nightmare.

Group D (4%) Making consistent profits day after day. Losing days could be counted on the fingers of one hand. Following one strategy and never ever breaking a rule. Sleeping well at night knowing that the next day will be just as profitable as the previous one. Taking long vacations. Living a happy life...

Calculating Profit and Loss

Our online trading platform will automatically calculate the P&L of your open positions, but it is useful to understand how this calculation is made to understand your profit and loss potential on each trade.
To illustrate an Forex trade, consider the following two examples.
Let's say that the current bid/ask for EUR/USD is 1.4616/19, meaning you can buy 1 euro for 1.4619 or sell 1 euro for 1.4616.
Suppose you decide that the Euro is undervalued against the US dollar. To execute this strategy, you would buy Euros (simultaneously selling dollars), and then wait for the exchange rate to rise.
So you make the trade: to buy 100,000 Euros you pay 146,190 dollars (100,000 x 1.4619). Remember, at 1% margin, your initial margin deposit would be approximately $1,461 for this trade.
As you expected, Euro strengthens to 1.4623/26. Now, to realize your profits, you sell 100,000 Euros at the current rate of 1.4623, and receive $146,230
You bought 100k Euros at 1.4619, paying $146,190.
Then you sold 100k Euros at 1.4623, receiving $146,230.
That's a difference of 4 pips, or in dollar terms ($146,190 - 146,230 = $40).
Total profit = US $40.
Now in the example, let's say that we once again buy EUR/USD when trading at 1.4616/19. You buy 100,000 Euros you pay 146,190 dollars (100,000 x 1.4619).
However, Euro weakens to 1.4611/14. Now, to minimize your loses to sell 100,000 Euros at 1.4611 and receive $146,110.
You bought 100k Euros at 1.4619, paying $146,190.
You sold 100k Euros at 1.4611, receiving $146,110.
That's a difference of 8 pips, or in dollar terms ($146,190 - $146,110 = $80)
Total loss = US $80.

Reading a Forex Quote

Quoting Convention

Quotes in the currency market can be a bit confusing because any position you take in the market is actually two different positions.

In FX you’ll see currencies listed in Pairs. This permits you more options in FX then you get in other markets. For example, you may be bullish on Euro and will therefore buy want to buy the Euro. In FX, you can chose what you want to buy those Euros with. You can buy them with USD, or you can buy them with JPY if you prefer. You can buy Euros with a long list of other currencies that we offer.

So a currency pair will be displayed in this manner.

EUR/USD

The first currency listed is referred to as the “base currency”. The second currency listed is considered the “counter currency”. So for EUR/USD, the Euro is the base currency and the US Dollar is the counter currency. If the pair is trading at 1.4700, that quote tells us how much of the Counter currency it would cost to buy one unit of the base currency. So it would cost $1.47 US to buy one Euro.

When it comes to placing a trade, keep in mind that any time you take a position you are doing so in terms of the base currency. So if you buy a pair, you are buying the base currency. If you sell a pair, you are selling the base currency. Then it’s easy to keep in mind that you are always doing the opposite with the counter currency. So, if you buy EUR/USD, you are buying Euros and selling US Dollars.

If that is still a bit too confusing, you can think of it simply this way. Buy if you expect the rate to go up. Sell if you think the rate will go down. Simple as that!

You will always see a two-sided quote in FX. In your FXCM account you will always be shown a Buy price and a Sell price. They can also be referred to as the “bid” and “ask” respectively. The Buy price is the rate that you can buy that pair at, and the Sell price is the rate at which you can sell that pair. The difference between the two prices is called the “spread”. The spread is determined by the price providers and liquidity in the markets at that precise moment. FXCM has up to 12 interbank firms streaming prices into our platform. The platform filters those feeds for the best Buy price and the best Sell price, and passes them on to account holders with a small mark up.

A spread exists for all tradable instruments, stocks, bonds, futures, options, etc, it just isn’t always visible to the trader.

So now you hopefully understand how currency pairs are quoted and what you are buy and what you are selling when you place a trade.

Forex Market Hours

Given the global nature of currency trading, the market is open for business around the clock, 24 hours a day. It is important for the trader to know the times when the major markets are active and how this can be implemented in their trading.

As a general rule, a specific currency will usually be most active when that particular market is open. For example, the GBP and its related pairs, while active and tradable 24 hours per day, tends be most active and widely traded during the hours when the London market is open. Meanwhile the JPY and its related pairs will be more widely traded during the Tokyo business day.

The market hours for the major FX markets are as follows:

London – 3 AM through 12 noon Eastern time (~35% of total FX volume)

New York – 8 AM through 5 PM Eastern time (~20% of total FX volume)

Sydney – 5 PM through 2 AM Eastern time (~4% of total FX volume)

Tokyo – 7 PM through 4 AM Eastern time (~6% of total FX volume)

The above information can be utilized in several ways. The more trades that are being executed during a given time (all things being equal), the narrower the Bid/Ask spreads will be. Greater liquidity results in a narrower spread.

Also, we see that between the hours of 8 AM and 11 AM Eastern US time, the two largest markets (London and New York) overlap one another for about 3 hours. This represents a key trading time slot for many traders. Keep in mind that each trading day will be different from every other and there are no guarantees that this time frame will generate incredible trades on a regular basis. However, with the London and New York markets open and trading simultaneously, more trading opportunities often present themselves.

While we see an overlap between the trading hours of the Tokyo and Sydney markets, it is not as significant as the London and New York overlap due to the significantly lower overall trading volume.

Weekend Trading

While the FX market technically never closes, virtually all of the major banks and trading entities do close for the weekend. The volume over the weekend is so small that it tends not to offer much trading opportunity for traders. While some activity can occur depending on fundamental news that may occur over the weekend, generally any movement in the currency pairs is negligible, and trading liquidity is extremely thin, making trade execution difficult and spreads very wide. Hence, the FXCM Trading Station closes at 4 PM Eastern time on Friday and opens again at 5 PM Eastern Time on Sunday.

Given differences among traders, some will keep positions open over the weekend while others will close all open positions before 4 PM Eastern on Friday.

You should now have the information that you need to understand trading hours in the currency market.

Rollover

In this lesson we are going cover Rollover. We will start by explaining the concept of rollover then go into an example of how it is calculated. We will show you how to take advantage of rollover, as many successful traders make it an integral part of their trading strategy.

Rollover is the interest paid or earned for holding a position overnight. The target interest rate associated with each currency (generally set by that currency’s Central Bank) is listed on the home page of Dailyfx.com. Here is an example: