Forex trading strategy is a key notion for a trader who works in the foreign exchange market. In fact, it is a number of rules and actions which, when accurately followed, will lead to success and profit and reduce losses. That is why professionals strongly advise to choose a suitable system of profitable trading.
It is out doubt that before testing any strategy a trader should make a choice of a broker. For instance, there are best binary brokers who can assist in selecting the most fitting variant.
The diversity of systems is so great that sometimes a trader can get lost in it. That is why there is a list of most popular Forex trading strategies.
It is a simple (but not less efficient) system based on four standard indicators: Moving Averages, Bollinger Bands, Stochastic Oscillator and MACD. Though signals appear not so often, they are pretty strong and reliable. This way of trading is most appropriate for basic currency pairs and timeframes H1 and H4.
The main point is to use signals of Moving Average indicator to determine a trend on the bigger timeframe (4 hour) and then wait for the MACD’s correction. After switching to the smaller time period (1 hour) a user can find the enter point depending on Bollinger Bands and using Stochastic as a filter.
This system is one of the “7 winning strategies for trading FX”. The point is that there is always a trend on daily, weekly or hourly charts. It can be uptrend, downtrend or sideways. Using candlesticks and different indicators, a user is able to measure trend strength, identify its age and so on. To get the most of the strategy, it is advised to sneak in during a trend pull-back.
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It is one of the most precise Forex strategies. The analysis based on the Fibonacci grid is the most accurate if other patterns of technical analysis are taken into consideration. In other words, the signals from the grid must be corroborated by other signals, for example, support/resistance levels, channels and so on. When the grid is set correctly, the price will always move according to Fibbonacci retracement levels helping a trader to predict the changes in the market and benefit from it.
According to this Forex scalping strategy a user should use 2 stochastic lines (slow and accelerated) in order to select areas where price tends upwards in the short-term correction and pulls back under the influence of a long trend. It is a pretty risky way of trading and suits an aggressive type of trading.
This system is based on the exponential moving averages crossover and can be used for all time frames and currency pairs. The advantage is that the user can identify breakthroughs in the price and re-sell.
When working with binary options, traders reduce risks with hedging, as it is one of the most efficient methods of risk-management. The hedging mechanism is in balancing commitments in the market and opposite to the direction in the futures market. So in order to protect deposit from losing money on a particular asset a position can be opened on another asset, which, according to a hedger’s point of view, is able to compensate this loss.
The advantage of this system is that the user can predict the price movements basing on Highs and Lows of the previous periods. Of course, breakouts take place; that is why it is essential to use stop losses. The strategy gives a clear understanding of the market (including loss periods), which give opportunity to calculate risks and increase profit instantly.
This classical best Forex strategy of trading is founded on the usage of levels of support and resistance. There are specific rules when a trader can enter or exit the market and get profit from a deal. For example, if a user wants to buy, he should take into consideration that the price should first break though the slow MA, being on the same level or higher than the slow MA. Then it is worth waiting until the first backoff. However, the main point of the system is to adapt to the indicator’s signals and react fast.
Quotations of the same tools differ depending on a broker. A trader can make money on these differences by buying one asset from one broker cheaper and selling it more expensive using the other middleman. Such system is good both for beginners and for advanced participants of the market, as the risk of a loss is minimal and profit can be calculated beforehand.
Wolfe Waves are patterns of revealed swings, which submit to strict rules. According to the theory of this strategy, the price always moves in particular directions. However, a beginner trader can hardly calculate these patterns, so the experience in trading is obligatory for using the strategy.
Many traders agree that it is impossible to have stable income without a working strategy. Nevertheless, it is better to check and recheck a chosen system in a demo-account before applying it to the real one. Though free Forex trading strategies are popular, a user has to select what is best for him and possibly become a builder of his own adapted strategy.
Article by Forex-Awards.com
