The Best Forex Strategies: Your #1 Complete Guide
When you set out to trade in to start trading in forex online, be ready to do plenty of important research. The information you learn is what you shall use to come up with plans to succeed in trading. These plans are known as Forex Strategies and are so many. As you learn more you’ll discover some promising quick return which is never the case. Picking a strategy that you want to work with needs to be a careful decision where you check the pros and cons of each one and how they work. Never blindly follow any one of them in the hope of succeeding in forex trading. In this guide, you get to learn about many of them so let’s get started…
The Bladerunner Trade Strategy
When it comes to Forex trading strategies that many people are currently applying, this one ranks among the top in the market. Its popularity stems from the fact that anyone can use it and has no limitation in terms of timeframe and asset. It can work on any assets and on any time frame available. It’s, therefore, a very good decision to learn more about it and how to apply it in your Forex trading.
The reason its named bladerunner is the fact that it cuts the action price set into two. One characteristic to note is for this strategy you don’t need any indicators that are off-chart. These are normally those indicators that are placed at the bottom of the price chart, for example, Awesome Oscillator. The only indicator that matters when using this strategy is the 20 period EMA. EMA stands for Exponential Moving Average. When you settle on this strategy as the one to use, keep an eye on the levels of resistance and support because they are very significant in its implementation. You need to adjust the bladerunner to match the time you place trades.
To better understand the strategy, you need to learn the logic behind it which is very simplistic. You can expect the continuation of the upward movement if the price exceeds the EMA and can retest it. The opposite occurs when the continuation of the downward movement is witnessed. This is if the price is below the EMA. This means the EMA is in charge of shifting the support or resistance levels.
Before you can make an entry of any sort, you must confirm the price has shifted from the range established which is where the asset was most traded for a while. Also, make sure the EMA is tested well by the price. This is because there is a said line that the price needs to bounce off and keep moving in the same direction. This confirms that the signal is correct.
A point to note when using this strategy is that it’s advisable to have an order for stop-loss in place. This makes it easier to manage the loss incurred when the signal received ends up being incorrect and the trade wasn’t successful.
Pros
- Doesn’t require off-chart indicators
- Can place a stop-loss order to manage risk
- Can be adjusted to match the time of placing trades
Cons
- You can never predict the right time to trade
- You never know how much you’ll make if correct
Daily Fibonacci Pivot Strategy
This is another strategy that you can use that uses Fibonacci retracements to get trade entries every day together with pivot level. You need to note the parameters used that are favorable like 38% and 50% in terms of Fibonacci points. These must be in confluence with pivot levels every day. This is a free strategy and no one should charge you a fee to use it. It being free opens it up to very many interpretations that produce differing variations. You can try and use it as a beginner but mostly experienced traders use this strategy. This is because it enables them to increase the number of opportunities they chance upon which happens when the requirements for trade entry are relaxed. This can happen by pinpointing an entry of trade by a currency pair that indicates clearly that in the past 5 days the true average range has exceeded those sessions of trading in those days.
It’s best to understand what a retracement is before proceeding. A retracement is a price movement that defies the current trend but only short term. It’s the work of the Fibonacci lines to pinpoint such moments and let them be known. This is what you can use to determine when the right time to buy or sell is. You get the upward trend which happens when the Fibonacci Retracements are used as signals indicating to buy which is when the pullback takes place. When the trend plummets downward, you can use Fibonacci lines to determine the selling positions that are short and optimal.
It’s believed by many traders that the most important level of retracement is 61.8. This can simply be explained. Price swings can occur in this area since chances are higher because of the buying and selling pressure that exists. But, this is all dependent on the direction the trend takes. Be careful to not confuse a retracement with a reversal for a trend because this can affect your trade performance negatively.
Pros
- Free to use
- Has favorable parameters to use
- Increases the number of opportunities you can chance upon
Cons
- Complex for a beginner to use
The Pop ‘n’ Stop Trade
This is a very simple strategy to use making it ideal for your first Forex trades before you can use more complex strategies. This is a breakout strategy that many users enjoy to use but is not the only strategy that makes use of breakouts. You wait for the trade to breakout from the normal tight range to make your move. Many traders believe that at these precise moments which are very rare, they can be able to make a lot of money. This is achieved by pinpointing and trading on the moving price because the movement is very forceful towards one direction or the other. This happens after it breaks from the range that is normally very tight.
Still, this sounds easy but spotting the exact moment is not as easy as it sounds. Another disadvantage of doing this is the fact that the price becomes too steep that the majority of the traders can’t reach it even if they spot the right moments. They end up disappointed because of missing out. Some traders take it further and chase after the price and not mind the breakouts. This is even more disastrous because most traders are dragged towards incurring losses. They make the mistake of entering a trade when kits already underway giving them limited chances to act differently.
The truth is traders won’t ever stop watching for trade breakouts because it has the potential of earning them a lot of profit. But the truth is only a few traders are that lucky. This makes this strategy not the best due to the high risk involved. The best way to test it out and see the outcome is on the demo account using virtual funds. This way the loss you incur won’t affect the money in your trading account. This strategy is also very prone to breaking news that affects the price of assets in so many unexpected ways.
Pros
- Simple to use
- Potential for high profits
- Can be tested on the demo account
Cons
- High-risk factor
- Easily affected by breaking or upcoming news
Bolly Bound Bounce Trading Strategy
When the market is flat, not many traders engage in active trading, however, those who do can successfully speculate at this time. This might sound strange but it’s possible to trade when there is a flat market and successfully too. This is the strategy referred to as Bolly Bound Bounce and is known to put up the Bollinger Bands indicator which is well known. You don’t require any other indicator except the Bollinger bands when applying this strategy.
Still, if you want to, you can opt to have more. When you decide to use this strategy, the Bollinger bands essentially are the ones that take up the positions of support or resistance levels. This is where the price is expected to bounce from. It’s, therefore, the expectation of traders for the crossover of the action price and the band that is on the outer part to act as entry and exit points. You can opt to use a stop-loss order which helps you take the functionality of profits to attain results that are much better. You can then proceed to adjust the stop-loss order when the direction of the price is better.
When it comes to using this strategy effectively, start by selecting Bollinger bands from the indicators listed in the trade room. This is normally at the bottom left corner. Ensure you clarify that the asset you’re eyeing is not trending which makes its price within your range. Trending assets tend to have price ranges that are out of the reach of most traders.
When one of the band on the outer part permits the price to bounce off it which means making a move in the direction opposite to it, it’s considered ranging if it touches the second band on the outer part. The best time to apply this strategy is when there is no excitement in the market and all is quiet. Even though the price reaches an outer band, you should not take this as the signal. You need to wait for confirmation to get an entry that’s reliable.
Pros
- Best used in a flat and quiet market
- Ideal when not wanting to deal with an excited market
- Makes use of Bollinger bands indicators
Cons
- Unexpected market activity can affect this strategy
1-Minute Scalping Strategy
When you hear of scalping, think of opening many trades that don’t last for more than a few seconds to a minute. Traders have managed to create scalping strategies that have increasingly become popular in recent years. When it comes to starting in forex trading, then the 1-minute scalping strategy is the best place to start. The factors you need to keep in mind once you decide to use this strategy are that you need to set aside time to concentrate. With this, you can get it done properly. Probably don’t use this strategy if you’re short on time and can’t spare more than an hour to focus on it and do it the right way.
With this strategy, you start with the first step that calls for you to get a set position opened which gains you a couple of pips in the process. You then proceed to close off the position later. The best way to perform this is to get a platform that has a few spreads because you’re only getting a few pips. This platform must also be the one that charges the least commission of all. This is why one main characteristic of a scalping strategy is the quantity and you can see traders even place over 100 trades daily.
To make this strategy work for you, you have to consider a few things. They include sessions for trading, the time frames, indicators, and instruments. In terms of instruments is the currency pair, time frame is the 1-minute, indicators are 50 EMA and Stochastic 5,3,3, and the sessions preferred are New York and London with the highest rates of volatility.
The best currency pairs to use with this strategy are the main ones even though you can still pair up any of the world currencies. The main currencies are preferable for their spread which is significantly low than many others. The best time to put this strategy in effect is when the market is highly volatile in trading sessions especially New York and London.
Set your time frame at 1 minute on the chart then have the two default indicators of EMA 50 and Stochastic 5,3,3 are applied on this chart. You then have to proceed to check the signals that you need at the short that opens and the positions that are long. All this is by using a scalping technique for forex that is simplistic.
In short, when you see the 50 EMA exceed the indicator that is 100 EMA, you then have to open an order that is long enough. When you note the price where you want to open the long order is almost the same as the EMA indicator then the stochastic will rise to points that exceed the level 20 which is what opens a position that is very long.
Pros
- This strategy exposes you to a reduced risk
- You can easily achieve movements that are small
- When markets are quiet you can still make use of moves that are small
Cons
- You require a hefty deposit to start
- Experienced traders have an advantage over beginners
Trend Following Trading Strategy
With this strategy, you simply have to buy a certain asset when its price rises from the norm. You then sell it when the price falls as you hope the movement continues. You can use certain factors to determine how the market is going to move. These include certain calculations, time frames, and techniques that are not similar to one another. These help you determine a trade signal when you know in which direction the market is heading.
If you opt for this strategy then you won’t be using predictions or forecasts to determine the levels of prices. All you have to do is jump on the trend ride it out. Many trend followers don’t associate with one another due to the diversity of techniques and time frames in play at any one time. You have to use this strategy to take advantage of all moves made in the market. You don’t have to distinguish between short, medium, and long ones in the Forex market.
The only time traders exit the trend is when there is a different event than expected. At that point, they step out and wait for the next trend to be established which they can once more ride. Here is where they are termed as ‘Cutting Loss’ when the market turns against them. You have to have a risk management angle when employing this strategy which can be three-fold. This is mainly the volatility of the current market, the market price at the current moment, and the number of futures held.
You have to undertake an initial rule of risk to determine the entry position at the time you start. You have to know the amount you can buy or sell depending on the money in your trading account. You can’t trade when you have less money in your account. You may have to increase the first trade due to price changes or opt to exit the entire trade when the price changes are too steep. Markets are volatile normally because of a few biases in terms of behavior that cause participants in the market to overreact hence the shift in prices.
Pros
- Pinpoint the best time frames to trade
- Use diverse techniques
- Get to ride the wave on any trade
Cons
- You’re at the mercy of biases in behavior in the market
Overlapping Fibonacci in Trading Strategy
This is a strategy that you can use after implementing the Fibonacci retracement successfully and for more than one time. You get to use the Fibonacci retracements confluence in collaboration with other indicators like resistance and support or points of pivot. This strategy is one of the best because it has exactly what you need to succeed in forex trading.
You have to trade two Fibonacci points that are very strong at an area that is known to have resistance or support. This guarantees you a reaction that you can use afterward. This is a very simple strategy and a favorite of many traders. They prefer it to others due to its simplicity. You have to use a chart that shows significant highs and lows which collaborate with retracements that are moderate and appear all over the path.
The benefit of using such a strategy is that traders get to choose trades on the confluence basis which is known to occur at points of Fibonacci retracements that differ. These can be points of extension such as 38, 62, and 79 percent just to list a few. You have to note that the process used to track this confluence remains the same and doesn’t change in any way. You can perform it better by creating lines of Fibonacci on a chart and then trace where the lines overlap.
If you’re an experienced trader then you can always trade in terms of the confluence with events and patterns that you can find at that moment. The patterns that support this the most are round numbers, points of pivot, trends, level of Fibonacci, and support/resistance levels among others. This strategy may be a little too complex for a beginner in forex trading. It’s best to start with simpler ones then advance to the complex ones when you learn it more and gain experience.
Pros
- Simple strategy for experienced forex traders
- Can choose trades of confluence
- Use similar methods to track confluence
- Experienced traders can trade with patterns and events
Cons
- Complex for beginners
Conclusion
Having no forex trading strategy in mind when you start placing trades is walking blindly into an unknown world. Experienced traders know the value of a good strategy and have mastered a few. There are very many strategies you can use in this area. Learn about them then create demo accounts to test out what you’ve learned. This is the only way to pinpoint the strategy that works best for you.
Don’t be hesitant to try all the ones in this guide. As a beginner, your main aim is to learn and gain experience in forex trading. Applying these strategies helps you test out your skills. Some strategies are very complex and might require some time before you can master how to use them. Start with simpler ones then progress as you keep trading and learning.
Risk Warning
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