Every trading manual or instruction emphasises the necessity of having a trading strategy for successful trading. When you choose your forex strategy, you gain greater clarity in the trading process, which helps minimise trading risks.
A profitable forex strategy serves as an essential guide. Without a system or plan, traders face high risks. Adhering to a strategy strictly helps avoid many mistakes. The market is unpredictable, often leading to trading errors.
Your forex strategy will guide you in various market conditions, ensuring you don’t have to guess when to enter or exit a trade. It will prompt you when to make your moves. However, even the best forex strategies can be adjusted, but should remain devoid of any unjustified elements.
Remember:
Having a forex strategy is not foolproof! It requires a continuous, robust review process that aims to effectively adjust and reflect the strategies set objectives, whilst factoring in continuous changes to market conditions.
Major Takeaways:
- Definition: Forex trading strategies are plans or sets of rules to guide buy or sell decisions in currency trading.
- Importance: A forex trading strategy provides clarity, minimise risks, and helps avoid market-induced mistakes.
- Types: The article lists various forex trading strategies like those based on technical indicators, Bollinger bands, moving averages, and more.
- Most profitable forex trading strategies: Highlighted strategies include Scalping strategy, Candlestick strategy, and Parabolic trading strategy.
- How to choose: Choose a forex trading strategy based on back testing, real account performance, and market conditions. Adjust based on individual parameters and risk setting requirements.
Types of Forex Trading Strategies
Trading strategies can be based on various tools. The most popular ones are:
- Trading strategy based on technical indicators
- Trading strategy based on Bollinger bands
- Trading strategy based on moving averages
- Trading strategy based on technical analysis and price patterns
- Trading strategy based on Fibonacci retracements
- Candlestick trading strategy
- Trend trading strategy
- Flat trading strategy
- Scalping
- Trading strategy based on fundamental analysis
Three Most Profitable Forex Trading Strategies
These strategies provide a foundation to develop your own forex trading strategy. The suggested settings and recommended levels to put pending orders are only recommendations. Back testing or performance on a real account may require adjustments to find suitable parameters for specific assets or market situations.
1. Scalping Strategy
This strategy is popular and often described on various trading websites. It is designed for short-term time frames and day trading, with short stop losses (SL) and take profits (TP).
Recommended Timeframe and Currency Pair:
- H1 timeframe
- EUR/USD
Indicators Used:
- Linear Weighted Moving Average (LWMA), Period 48 (red line)
- Trend Envelopes V2, Period 2 (orange and blue lines)
- DSS of momentum
Conditions to Open a Long Position:
- The price breaks through the orange line of Trend Envelopes upside.
- The candlestick is above LWMA.
- The DSS of momentum’s additional line is green and above the signal dotted line.
Conditions to Open a Short Position:
- The price breaks the blue line of Trend Envelopes downside.
- The candlestick is below LWMA.
The DSS of momentum’s additional line is orange and below the signal dotted line.
2. Candlestick Strategy
This profitable weekly trading strategy is used for position trading with different currency pairs. It relies on the price’s springy action, expecting a reversal after a quick rise.
Timeframe:
- W1 (weekly)
Conditions to Open a Long Trade:
- The previous week’s bear candlestick has a relatively big body.
- Enter a long trade at the beginning of the next week with a stop loss of 100–140 points and a take profit of 50–70 points.
Conditions to Open a Short Position:
- The previous week’s bullish candlestick has a relatively big body.
- Open a short position at the beginning of the next week.
3. Parabolic Trading Strategy
This universal trend strategy uses standard MT4 indicators, EMAs (exponential moving averages), and Parabolic SAR as a confirmation tool.
Indicators Used:
- EMA with periods 5, 25, and 50 (EMA (5) is red, EMA (25) and EMA (50) are yellow)
- Parabolic SAR
Conditions to Open a Long Position:
- Red EMA (5) breaks through the yellow ones from below.
- Parabolic SAR is below the candlesticks.
Conditions to Open a Short Trade:
- Red EMA (5) breaks through the yellow ones from above.
- Parabolic SAR is above the candlesticks.
From Theory to Practice with Ox Securities
Step 1: Open a Demo Account
Ox Securities offers a free demo account without the need for deposit or verification. This takes less than 5 minutes and allows you to practice without any risk.
Step 2: Study the Trading Platform
Explore the user-friendly and intuitive interface of Ox Securities’ trading platform, understand the instruments available, and learn how to make trades.
Step 3: Start Trading
Ox Securities supports both MT4 and built-in trading terminals, enabling you to use a wide range of strategies effectively.
Features of Effective Forex Strategies
Minimum Lagging Indicators: Less lagging means more accurate forecasts.
Simplicity: Understanding the main principles of your trading strategy is crucial.
Special Features: The strategy should be tailored to your trading style, personality, and specific circumstances.
Developing your trading strategy is vital for success, but initially, testing various proven strategies on a demo account is beneficial. Ox Securities provides detailed descriptions, professional trader blogs, analytics, and a comprehensive educational block to help you evolve from a beginner to a professional trader.
Conclusion
To be a successful Forex trader, develop and refine your own profitable trading strategy. Stay informed about the latest Forex trading strategies, improve your trading plan, and adhere to the principles outlined for a satisfying trading performance with Ox Securities.
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