What Is Best Forex Trading Strategy

Practice you lot feel lost trying to figure which Forex trading strategies to use?

For instance:

Should you exist a day trader, swing trader, position trader, news trader, scalper, or a combination of different forex trading strategies?

It can be frustrating, right?

What’s the all-time forex strategy out there?

Because you’ve seen traders make money with unlike forex trading strategies.

But…

When y’all attempt information technology, information technology fails you. @^*@^#@*#!!

At present, don’t worry.

Because in today’s post, I’ll share with you
five types of Forex trading strategies that piece of work
and how to observe the best ane that suits you.

Sounds adept?

So let’s begin…

Forex trading strategies that work #1 — Position trading

forex strategies, f, t

Position trading is a longer-term forex trading strategy approach where you tin can agree trades for weeks or even months.

The timeframes you’ll trade on are usually the Daily or Weekly.

Equally a position trader, you lot mainly rely on fundamental analysis in your trading (like NFP, GDP, Retail sales, and etc.) to give a bias.

Also, you might use technical analysis to better fourth dimension your entries.

Let’s say:

You analyze the fundamentals of EUR/USD and determine it’s bullish. But, you don’t want to go long at any price.

So, you wait for EUR/USD to come up to Back up before taking your position.

At present if your analysis is correct, you could enter at the commencement of a new trend earlier anyone else.

An example:

forex strategies, f, t

Now, let’s talk over the pros and cons of position trading…

The pros:

  • Don’t need to spend much time trading because your trades are longer-term
  • Less stress in your trading as you’re not concerned with the short-term price fluctuations
  • A favorable run a risk to reward on your trades (maybe 1 to five or more than)

The cons:

  • Crave a firm agreement of fundamentals driving the marketplace
  • Need a larger upper-case letter base because your terminate loss is wide
  • May not make a profit every yr because of the low number of trades

And lastly…

In that location’s a trading strategy called Tendency Following (which is similar to position trading).

The just difference is Trend Post-obit is purely a technical approach that doesn’t use any fundamentals.

Nonetheless, using a tendency-post-obit arroyo tin can be the best forex strategy for trending pairs.

Forex trading strategies that piece of work #2 —
 Swing trading

forex strategies, f, t

Swing trading is a medium-term trading strategy where you lot tin hold trades for days or fifty-fifty weeks.

The timeframes yous’ll trade on are usually the one-hour or 4-hr.

As a swing trader, your concern is to capture “a single move” in the market (otherwise called a swing).

So you’ll likely:

  • Purchase Support
  • Sell Resistance
  • Trade breakouts
  • Merchandise pullbacks
  • Trade the bounce of the moving boilerplate

Thus, information technology’south important to larn technical concepts like Support & Resistance, candlestick patterns, and moving average.

Hither’s an example of swing trading on USD/JPY:

forex strategies, f, t

Now, let’due south hash out the pros and cons of swing trading…

The Pros:

  • Don’t have to quit your full-time job to exist a swing trader
  • It’s possible to be profitable every yr because you have more trading opportunities

The Cons:

  • Won’t be able to ride big trends
  • Have overnight risk

Now, if you want to learn more than about swing trading, then The Complete Guide to Finding High Probability Trading Strategy volition aid immensely.

Simply overall, using a swing trading arroyo can be the best forex strategy when the pair is ranging.

Let’s move on…

Forex trading strategies that work #3 — Mean solar day trading

Day trading a short-term trading strategy where yous’ll hold your trades for minutes or fifty-fifty hours (information technology’s similar to swing trading simply at a “faster” pace).

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The timeframes you’ll trade on are unremarkably the 5mins or 15mins.

As a day trader, your concern is to capture the intraday volatility.

This means you must trade the most volatile session of your musical instrument because that’s where the money is made.

So, you’ll probable:

  • Purchase Back up
  • Sell Resistance
  • Merchandise breakouts
  • Trade pullbacks
  • Merchandise the bounciness of the moving average

Now…

If yous prefer a forex trading strategy like day trading, yous won’t be concerned with the fundamentals of the economy or the long-term trend considering information technology’southward irrelevant.

Instead, you’ll identify your bias for the day (whether to be long or curt) and merchandise that direction for the session.

An example:

Below is the chart of USDCAD (4-60 minutes timeframe) at 1.2900 Resistance.

If the cost tin’t break higher up it, chances are, today will be a “down” day.

forex strategies, f, t

Next…

On the 15-minute timeframe, you noticed a Shooting Star has formed which signals selling force per unit area.

Yous can accept a brusk trade with possible target profit at Support (bluish box).

Here’southward what I mean:

forex strategies, f, t

Now, permit’due south hash out the pros and cons of day trading…

The pros:

  • If you’re adept, you can make money on nigh months
  • No overnight chance because you lot shut your positions by the end of the day

The cons:

  • It’south stressful as you’re constantly watching the markets
  • Can lose a lot more than intended if yous suffer massive slippage (from Black Swan events)
  • Huge opportunity cost as you could be earning a full-time bacon elsewhere

Day trading is something a lot of traders are attracted to, only virtually aren’t suited to.

But if you have the necessary skills and capital letter to be a successful day trader, then this could be the best forex strategy for you.

Now if day trading is still too “ho-hum” for you, then the next forex trading strategy might arrange yous…

Forex trading strategies that work #4 — Scalping

Alert:

I don’t recommend scalping for the retail traders because the transaction price will consume up nigh of your profits.

And you’re slower than the machines which put you at a major disadvantage.

Yet, if you want to larn more than, then read on…

Scalping is a very short-term strategy where you’ll hold trades for minutes or even seconds.

This is the fastest ane among all forex strategies.

As a scalper, your concern is with what the market is doing now and how you can take advantage of it.

The master tool you lot’ll employ to trade is social club menstruation (which shows you lot the buy and sell orders in the market place).

An example:

forex strategies

Now, let’s discuss the pros and cons of scalping…

The pros

  • Have lots of trading opportunities each twenty-four hours
  • Tin can make a healthy income from trading

The cons

  • High financial cost (paying your software, newsfeed, connexion, and etc.)
  • Glued to the screen for many hours a 24-hour interval
  • It’s a highly stressful attempt

Lastly…

If you want to exist a scalper, I recommend you bring together a proprietary trading house because they will provide the tools and the forex strategies to assistance you with it.

Forex trading strategies that work #5 — Transition trading

You’ve probably never heard of this forex trading strategy before because I came upwards with it.

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Hither’southward how…

Dorsum while I was in proprietary trading, one of the “interesting” things I learned was transition trading.

You lot’re probably wondering:

“What is transition trading?”

Well, the idea is to enter a trade on the lower timeframe, and if the market place moves in your favor, you can increment your target profit or trail your stop loss on the higher timeframe.

Here’s an example:

Let’due south say y’all traded the breakout on GBP/JPY one-hour timeframe and the toll quickly went in your favor.

forex strategies, f, t

At present…

You lot noticed the 4-hour timeframe respecting the 20MA.

And then instead of taking profits, you lot trail your stop loss using the 20MA hoping to ride a bigger move.

And if you’re incorrect, y’all’ll exit your merchandise when the price closes below the 20MA.

forex strategies

Now, at that place are variations of forex strategies for transition trading.

But the main idea is this:

  1. Find an entry on the lower timeframe
  2. If the price moves in your favor, consider planning your exits on the college timeframe

Now, allow’s discuss the pros and cons of transition trading…

The pros:

  • Can get an insane risk to advantage (perchance 1 to 10 or more)
  • Can lower your take chances as your entry is on the lower timeframe

The cons:

  • Only a scattering of your trades will lead to monster winners
  • Must understand multiple timeframes really well

At present that you have an idea of the different forex trading strategies out there.

The next question is…

Which Forex trading strategies suit yous best?

Here’s the affair:

I’ve seen traders wasting many years on forex strategies that don’t suit them (right from the start).

If ONLY they considered these three things I’m near to share with yous…

…they could have saved years of frustrations, money, time, and effort.

And, I don’t want you to be one of them.

And so before you attempt to trade any forex trading strategies, you MUST consider these iii questions…

1. Do you want to grow your wealth or make an income from trading?

Commencement, permit’s ascertain what’due south income and wealth.

Income = Make 10 dollars a month

Wealth = Abound Ten % a year


For income:

If you brand an income from trading by using one or more forex strategies, you lot must observe more trading opportunities within a shorter time period (for the law of large numbers to play out).

This means y’all must trade the lower timeframes and spend more hours in front of the screen.

The Forex trading strategies y’all can utilise are scalping, twenty-four hours trading, or curt-term swing trading.


For wealth:

If you want to grow your wealth from trading, you can afford to have fewer trading opportunities.

This means you can trade the higher timeframes and spend fewer hours in forepart of the screen.

The forex strategies you tin utilize are swing trading or position trading.

2. How much fourth dimension can you devote to trading?

This is a no-brainer.

Merely I’ve included it because I’ve seen traders who can’t think logically (not yous of course).

And so here’s the deal:

If you have a full-fourth dimension job, or yous tin can’t afford to spend 12 hours a day in forepart of your monitor, so don’t try scalping or twenty-four hour period trading (it’s silly).

Instead, go with a swing or position trading forex trading strategy.

Only, if yous have all the time in the world and enjoy short-term trading, by all means, go ahead.

3. Does this Forex trading strategy suit you?

Here’due south the breakdown:

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Most trading strategies will fall into i of 2 categories:

  1. A loftier win charge per unit with low reward to gamble
  2. A low win rate with high reward to risk

So, which arroyo is ameliorate?

Well, in terms of profitability both approaches can piece of work because it depends on your win rate and risk to advantage ratio.

Then a better question would be…

“Which approach are yous more comfortable with?”

If y’all prefer a higher winning rate only smaller gains, then go for swing trading.

If you prefer a lower winning rate simply larger gains, then go for position trading.

Forex trading strategies for beginners, how to become started…

Now if you’re new to Forex trading, you lot can get overwhelmed with the sheer number of trading strategies out at that place.

Y’all’ve got stuff like trading indicators, nautical chart patterns, Elliot Waves, etc.

Where practise you start?

My suggestion is to main Support and Resistance and here’s why…

Considering if you call back about this, the price tin only practise i of two things:

  1. It reverses at Back up and Resistance
  2. It breaks Support and Resistance

This means if you understand Back up and Resistance, you have the ability to be a tendency trader, breakout trader, or fifty-fifty a reversal trader.

The best office?

It works on unlike timeframes whether you use a forex strategy such as mean solar day trading, swing trading, or fifty-fifty position trading.

So hither’s how to become started…

1. Larn how to draw Support and Resistance

I show yous how to practise it stride by step in this training below…

two. Learn how the price reacts at Support and Resistance (SR)

When the price breaks SR, ask yourself:

What’s the pattern that occurred before the breakout?

When the price reverses at SR, inquire yourself:

What’s the pattern that occurred before the reversal?

Afterwards studying thousands of charts, you’ll take a 6th sense of whether the toll is likely to interruption or reverse at SR

3. Define your trading timeframe

Next, commit to a timeframe you lot can trade comfortably.

For example:

If you have a full-time job, information technology doesn’t make sense to merchandise the 5mins timeframe considering y’all don’t have the time for it.

Instead, you’re amend off trading the higher timeframes (like 4-hour and above) equally information technology requires less screen time.

So, be honest with yourself and determine on a timeframe that suits you all-time.

iv. Develop a trading programme

Once you know your trading strategy and timeframe, you can develop a trading program and a forex strategy for information technology.

If you lot want to learn how to do information technology, go study this post below…

How to be a profitable trader within the next 180 days

Conclusion

Hither’s a recap of the different forex trading strategies that piece of work:

Position trading: A wealth-edifice approach for those who can’t spend the whole day in front of the screen

Swing trading: A wealth or income edifice approach for those who can spend a few hours each day trading

Mean solar day trading and scalping: An income-generating approach for those who can spend the whole day in front of the screen

And finally…

Before you larn whatever forex trading strategies, you must consider…

  1. Your trading goals
  2. Your time available
  3. Whether the strategy fits your personality

At present here’s what I’d like to know…

Which forex trading strategies do y’all use?

Permit me know your thoughts in the comments below.

Source: https://www.tradingwithrayner.com/5-types-of-forex-trading-strategies-that-work/

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