BEST FOREX TRADING STRATEGIES THAT WORK

Maintaining your discipline is a key part of trading. How do we ensure we enforce that discipline when we are trading?

The best way to know a strategy is good and we can stick to it is if we know it is well-reasoned and back tested, then you are confident you are using one of the best and successful forex trading strategies.

This will build you confidence and make it easier to follow the rules guiding you strategy, which allows you maintain your discipline.

When people talk about forex strategies, they meant a particular trading method that is usually just one part of a complete trading plan. A consistent forex trading strategy gives entry signals that are advantageous and vital to consider;

1.    Position sizing

2.    Risk Management

3.    How to exit trade.

PICKING THE BEST FOREX STRATEGY

To pick the best forex trading strategies, no one can give a single answer that this particular strategy is the best.

WHY?

The best forex strategies will be best known according to the individual.

This means you need to take into consideration your personality and find out the best forex strategy to suit you.

 Because what may work best for someone might just be really disastrous for you, also a strategy that was discarded by others may turn out to be right for you.

The following are trading styles from short time frames to long and they’ve been used widely over the years and they still remain a popular choice among strategies.

1.    Scalping: These are short-lived trades, possibly held for just a few minutes. A scalper looks to quickly beat the bid and lightly pass a few points of profits before closing.

2.    Day Trading: These are trades that are done with or exited before the end of the day. This removes the chance of being affected by large moves over the night. Trades might last for few hours and price bars on charts might be set to one or two minutes.

3.    Swing Trading: These are positions held for several days, seeking to profit from short term price patterns. A swing Trader might just look at bars showing every half an hour or an hour.

4.     POSITIONAL TRADING: These are Long term trends, seeking to maximize profit from vital shifts in prices. A long term trader will typically look at the end of day Charts. 

THE ROLE OF PRICE ACTION IN FOREX TRADING STRATEGIES

The best forex trading strategies utilizes price Action, which is also known as technical analysis.

There are two main techniques when it comes to technical currency analysis: i) Trend following, ii) Counter-trend Trading. They both try to profit by knowing and exploiting price patterns.

In aspect of price patterns the most important concepts are SUPPORT AND RESISTANCE.

Simply put the terms represent the tendency of a market to bounce back from previous lows and highs.

Support is the market’s tendency to rise from a previously stable low.

While Resistance is the market’s tendency to fall from a previously stabled High.

 This happens because market participants happen to judge subsequent prices against recent highs and lows.

When market goes near recent highs sellers will be attracted to what they seem either expensive or a good place to make profit.

When the market goes near recent lows buyers will be attracted to what they see as cheap.

Thus current prices are evaluated because recent highs and low is the Yardstick.