I recommend setting a stop loss at a distance of points in four-digit quote. A take profit is points. The arrow points to the signal candlestick where Trend Envelopes colours change. Note purple ovals that the blue line is below the orange and is moving otherwise the signal should be ignored. At the signal candlestick, the green line of the DSS of momentum is above the dotted line. The price breaks the blue line of Trend Envelopes downside.
At the same candlestick, the rising blue line changes into the falling orange line. The candlestick is below LWMA. When the previous condition is met, expect a candlestick to appear below the moving average. It must close under the red line of LWMA.
There must orange line of Trend Envelopes at the signal candlestick. The DSS of momentum additional line should be orange at the signal candlestick. It should be located below the signal dotted line that is, it is breaking through it or has already broken. The below screen displays a candlestick that closed at the level of MA the red line , almost fully below the line.
The below screen shows that the DSS is below its signal line at the signal candlestick. Besides, the blue line is flat, not rising. Signals are relatively rare, you can wait for one signal for a few days. Do not trade when the market is flat. Test this strategy directly in the browser and assess the performance. This is a profitable weekly trading strategy, which can be used for position trading with different currency pairs.
It is based on the springy action of the price — if the price rose quickly, it should fall sooner or later. We can use a chart in any terminal and a timeframe W1 although you can also use a daily timeframe. You should analyze the size of the candlestick body of different currency pairs. Next, choose the pair with the longest distance between the opening and closing prices within the week. You will enter a trade on this pair at the beginning of the next week.
The bear candlestick, indicating the price action for the previous week, has a relatively big body. You enter a long trade at the beginning of the next week. You should set a stop loss at a distance of points and a take profit - at points. In the middle of the week, exit the trade. It may be closed with a take profit or a stop loss. Then, again expect the beginning of the week and place a new order.
Do not place orders at the end of the week. It is clear from the chart that, following each bearish candlestick, there is always a bullish one although it smaller. The matter is that what period you should take to compare the relative length of candlesticks. It is individual for each currency pair.
Note that some small bear candlesticks were followed by rising candlesticks. The relatively small fall, occurred in the previous week, may continue. The bullish candlestick, indicating the action during the previous week, has a relatively big body. Red arrows point to the candlesticks that had large bodies relative to the previous bullish candlesticks. All signals were profitable except for the trade that is marked with a blue trade.
The disadvantages of the strategy are rare signals, although the percentage of profit is quite high. And you can launch the strategy trading multiple currency pairs. This strategy has an interesting modification based on similar logic. Investors, day traders, working with a trading volume prefer intraday strategies. They do not have enough money to make a strong influence on the market. So, if there is a strong market action in the weekly chart, this signal the pressure made by big traders.
Differently put, if there are three weekly candlesticks in the same direction, the fourth candlestick should be in this direction too. The psychological factor is also important here. Those, who have been pushing the market in one direction, should start taking the profit in a month.
It is good if the next following candlestick is bigger than the previous one. Doji candlesticks candlesticks without bodies are not taken into account. A stop loss is set at the close level of the first candlestick in the sequence. It can take 2 or 3 months. But if you launch the strategy on multiple currency pairs, this term of expectation is justified. Take swaps into account! The strategy is referred to as a universal one, and it is often recommended as the best Forex strategy for consistent profits.
This is a trend strategy. Most sources suggest using it in different timeframes, including minute ones, but market noise lowers its efficiency in very short timeframes. EMA with periods 5, 25, and Apply to — close closing prices. You can enter the trade at the same candlestick when the moving averages have crossed.
A stop loss is set close to the local low, take profit is points. But if you manage trades manually, you can make a bigger profit. It indicates a change in the slope from a rise to a flat. It is clear from this screenshot that all the three signals two longs and one short yielded profit.
One could have entered the trade at the next candlestick. It is after the signal one to be sure in the trend direction. However, a good entry point would have been missed. It is up to you whether to risk or not. These parameters will hardly work for hourly timeframes. Well, you are familiar with the theory now. I want to briefly describe how to launch these strategies in real trading. Step 1. Open a demo account. It is free, you do not have to top up the deposit. On the website home page, there is the Registration button.
Click on it and follow the instructions. You can also open an account in other menus. For example, in the upper menu, trading conditions for an account, and so on. Step 2. Study the functions of the trader profile. It has a user-friendly, intuitive interface. You need to study the instruments on the platform and find out how to make a trade. The trader profile is described in this overview. Step 3. Open trading platform. LiteFinance provides detailed descriptions of dozens of indicators and strategies.
There are also the answers to your questions and the recommendations of professional traders. LiteFinance includes a professional trader blog , analytics, and a complex educational block. It provides all the necessary tools to develop your skills from a beginner to a professional. LiteFinance allows getting many pleasant bonuses and prizes, from the brand new gadgets to a car or even a dream house! You can learn more about the promotion here.
Try yourself! All you need is to just open a demo account via this link. A swing trader might typically look at bars every half an hour or hour. Positional trading - Long-term trend following, seeking to maximise profit from major shifts in price. A long-term trader would typically look at the end of day charts. The best positional trading strategies require immense patience and discipline on the part of traders. It requires a good amount of knowledge regarding market fundamentals.
Below is a list of trading strategies regarded to be some of the top Forex trading strategies around and how you can trade them, so you can try and find the right one for you. Did you know that you can learn to trade step-by-step with our brand new educational course, Forex , featuring key insights from professional industry experts?
Click the banner below to register for FREE! One of the latest Forex trading strategies to be used is the pips a day Forex strategy which leverages the early market move of certain highly liquid currency pairs. After the 7am GMT candlestick closes, traders place two positions or two opposite pending orders.
When one of them gets activated by price movements, the other position is automatically cancelled. The profit target is set at 50 pips, and the stop-loss order is placed anywhere between 5 and 10 pips above or below the 7am GMT candlestick, after its formation.
This is implemented to manage risk. After these conditions are set, it is now up to the market to do the rest. Day trading and scalping are both short-term Forex trading strategies. However, remember that shorter-term implies greater risk due to the nature of more trades taken, so it is essential to ensure effective risk management. MT4 account:. Accessed: 27 April at am BST - Please note: Past performance is not a reliable indicator of future results or future performance.
The orange boxes show the 7am bar. In some instances, the next bar did not trade beyond the high or low of the previous bar resulting in no trading setup unless the trader left their orders in the market. The effectiveness of the 50 pips a day Forex strategy has not been tested over time and merely serves as a platform of ideas for you to build upon. Past performance is not a reliable indicator of future results.
The best Forex traders swear by daily charts over more short-term strategies. Compared to the Forex 1-hour trading strategy, or even those with lower time-frames, there is less market noise involved with a Forex daily chart strategy. Such Forex trade setups could give you over pips a day due to their longer timeframe, which has the potential to result in some of the best Forex trade setups and potentially some of the most successful trading strategies around.
Daily Forex strategy signals can be more reliable than lower timeframes, and the potential for profit could also be greater, although there are no guarantees in trading. Traders also don't need to be concerned about daily news and random price fluctuations.
The Forex daily strategy is based on three main principles:. While there are plenty of trading strategy guides available for professional FX traders, the best Forex strategy for consistent profits and creating the most successful trading strategies can only be achieved through extensive practice. Let's continue the list of trading strategies and look at another one of the best trading strategies.
You can take advantage of the minute time frame in this Forex strategy. In regards to the Forex trading strategies resources used for this type of strategy, the MACD is the most suitable which is available on both MetaTrader 4 and MetaTrader 5. You can enter a long position when the MACD histogram goes above the zero line. The stop loss could be placed at a recent swing low. You can enter a short position when the MACD histogram goes below the zero line.
The stop loss could be placed at a recent swing high. The red lines represent scenarios where the MACD histogram has gone above and below the zero line:. While many Forex traders prefer intraday Forex trading systems due to the market volatility providing more opportunities in narrower time frames, a Forex weekly trading strategy can provide more flexibility and stability.
A weekly candlestick provides extensive market information. Weekly Forex trading strategies are based on lower position sizes and avoiding excessive risks. For this strategy, traders can use the most commonly used price action trading patterns such as engulfing candles, haramis and hammers.
One of the most commonly used patterns in Forex trading is the hammer which looks like the image below:. Accessed: 27 April at pm BST - Please note: Past performance is not a reliable indicator of future results or future performance.
To what extent fundamentals are used varies from trader to trader. At the same time, the best Forex strategy will invariably use price action. This is also known as technical analysis. When it comes to technical currency trading strategies, there are two main styles: trend following and countertrend trading.
Both of these FX trading strategies try to profit by recognising and exploiting price patterns. When it comes to price patterns, the most important concepts include support and resistance. Put simply, these terms represent the tendency of a market to bounce back from previous lows and highs.
This occurs because market participants tend to judge subsequent prices against recent highs and lows. Therefore, recent highs and lows are the yardsticks by which current prices are evaluated. There is also a self-fulfilling aspect to support and resistance levels.
This happens because market participants anticipate certain price action at these points and act accordingly. As a result, their actions can contribute to the market behaving as they had expected. Did you know that you can see live technical and fundamental analysis in the Admirals Trading Spotlight webinar?
In these FREE live sessions, taken three times a week, professional traders will show you a wide variety of technical and fundamental analysis trading techniques you can use to identify common chart patterns and trading opportunities in a variety of different markets. Sometimes a market breaks out of a range, moving below the support or above the resistance to start a trend. How does this happen? When support breaks down and a market moves to new lows, buyers begin to hold off.
This is because buyers are constantly noticing cheaper prices being established and want to wait for a bottom to be reached. At the same time, there will be traders who are selling in panic or simply being forced out of their positions or building short positions because they believe it can go lower. The trend continues until the selling is depleted and belief starts to return to buyers when it is established that the prices will not decline further.
Trend-following strategies encourage traders to buy the market once it has broken through resistance and sell a market once they have fallen through support. In addition, trends can be dramatic and prolonged, too. Because of the magnitude of moves involved, this type of system has the potential to be the most successful Forex trading strategy.
Trend-following systems use indicators to inform traders when a new trend may have begun, but there's no sure-fire way to know of course. Here's the good news: If the indicator can establish a time when there's an improved chance that a trend has begun, you are tilting the odds in your favour to use the best Forex trading system. The indication that a trend might be forming is called a breakout. A breakout is when the price moves beyond the highest high or the lowest low for a specified number of days.
For example A day breakout to the upside is when the price goes above the highest high of the last 20 days. Trend-following systems require a particular mindset, because of the long duration - during which time profits can disappear as the market swings. These trades can be more psychologically demanding.
When markets are volatile, trends will tend to be more disguised and price swings will be greater. Therefore, a trend-following system is the best trading strategy for Forex markets that are quiet and trending. A good example of a simple trend-following strategy is a Donchian Trend system.
Donchian channels were invented by futures trader Richard Donchian , and is an indicator of trends being established. The Donchian channel parameters can be tweaked as you see fit, but for this example, we will look at a day breakout. It's called Admiral Donchian. To upgrade your MetaTrader platform to the Supreme Edition simply click on the banner below:.
There is an additional rule for trading when the market state is more favourable to the Forex trading system. This rule is designed to filter out breakouts that go against the long-term trend. In short, you look at the day moving average MA and the day moving average. The direction of the shorter moving average determines the direction that is permitted. This rule states that you can only go:. Trades are exited in a similar way to entry, but only using a day breakout.
This means that if you open a long position and the market goes below the low of the prior 10 days, you might want to sell to exit the trade and vice versa. Now let's look at another system that could be the best trading strategy for you. One potentially beneficial and profitable Forex trading strategy is the 4-hour trend following strategy which can also be used as a swing trading strategy. This strategy uses a 4-hour base chart to screen for potential trading signal locations.
Strategies based on fundamental analysis rely on economic news and business data, while technical analysis strategies require the use of technical indicators. While there is a long list of profitable forex trading strategies available to traders, there are trading strategies that nobody will tell you about.
Thankfully, in this article, we are here to disclose three 3 of those profitable strategies that veteran traders may not tell you about. Before we delve into the strategies, let's understand other benefits of using forex strategies aside from maintaining discipline. A forex trading strategy is necessary for successful trades.
When you stick to a trading strategy, it helps you to understand the trading process and minimize trading risks. A trading strategy helps traders to determine what to do at different market conditions. This means for a strategy to be profitable; it should suit any market condition. Plus, using a trading strategy would prompt you when you should enter or leave the market to avoid incurring losses.
So, what are the strategies that nobody will be willing to tell you about? Let's now outline then:. The first trading strategy you need to be aware of if you want to succeed as a forex trader is to use the popular MT5 trading platform. The MT5 trading platform was developed by MetaQuotes to accommodate more financial instruments. It boasts of several trading tools and resources for you to quickly jump-start your trading career.
The major benefit of trading with MT5 is that you can trade any asset class of your choice from any location and at any time on your mobile phone or laptop. The MT5 trading platform also has trading signals and trading robots, which, when effectively utilized, can help you trade on autopilot. There are three steps to using the MT5 trading platform - the first is to understand how the platform works.
Secondly, you have to visit the MetaQuotes marketplace to download the software on your trading device, and lastly, place your order. The second profitable forex trading strategy nobody tells you about is to use trading signals to drive your trades. Trading or forex signals are trade suggestions developed by expert traders to assist newbie and intermediate traders in making informed trade decisions.
Trading signals can potentially help you increase your earnings over time and also improve your trading skills. As a beginner, the forex market would be a complete disaster if you don't leverage the use of trading signals. You would not only lose money to market forces, but you would also waste your precious time that would have been expended on other important things.
There are several trading signals providers on the market for you to choose from. Before you choose any signal provider, ensure you consider their reputation and pedigree and also read reviews about them. Lastly, start with a free signal provider to understand how the process works before switching to a paid provider. This method of noting the prices is widely used and not only on the Forex market.
It was created around three hundred years ago. There are a lot of trading strategies based on reading the candles only, however, their credibility has been often asked. There is too much space left for ambiguous interpretation.
These strategies are universal and can be used in many markets and many time frames. Moreover, candlesticks representation is very simple in reading and analyzing, though pretty weak in precision. Nevertheless, we suggest this analysis being one of your fundamental arguments while making decisions.
No matter, if you are a day trader or a night trader: you always start with charts analysis and its interpretation. In fact, you also have to decide for yourself, whether you are a loose trader in terms of charts interpretation of the strict one, who is always following an algorithm and leaves no space for ambiguous statements. However, it is worth mentioning, that it is much safer for beginners to follow the set of rules while analyzing the charts and drawing conclusions from that.
One of the foundations of the price analysis theory is that prices have their own special points, where they change the direction or, vice versa, strengthen and consolidate. Therefore, many traders avoid making transactions in close proximity to these points. These ranges are considered the most unpredictable.
The theory was named after the name of these price levels: support and resistance levels theory. There is one common rule in support and resistance level trading formulated: if the price is breaking through and the candle closes far beyond the level, it tells us that the trend is definitely going to move further in line with the direction of the breaking point.
In addition to support and resistance levels recognition approach, there are many different techniques and profitable Forex systems that are of much use in trading. The fact that traders analyzing the same chart pattern notice different figures and, therefore, make different conclusions is also noticeable.
This is something that makes technical analysis more art than science. Experienced traders say that the tool, which employs more than 25 percent of unexplained data independent from any fundamental or technical theories , is too doubtful and cannot be counted among the most profitable FX systems. Taking an Elliott wave theory as a basis for your strategy we suggest not to explain the sequence of the waves by Fibonacci ratios.
It is more than obvious, that after a big wave, there is another one coming with a smaller diapason. Everybody is able to notice a consistent pattern, but sometimes your mind might play a malicious trick on you. It probably happened to everyone, when you see a cloud in form of an elephant head or a cliff with a human face. You see, what you want to see and your mind is helping with fulfilling the real picture.
Sometimes it can lead to wrong conclusions. To summarize it up, we would like to warn you and suggest approaching these techniques with a distance. Tastes differ. The same applies to traders: all of them have their own specific favorite techniques and currency pairs, personal favorite time frames, and trading platforms. However, all Forex traders agree on one postulate: trends are good. There are two Dow postulates, considered to be the fundamental principles of technical analysis: the market has a trend and it is the trend unless the price is reversing its direction.
The trend itself is a constant price movement in one direction for a certain period of time. Due to their love for trends, Forex traders were given a lot of measuring tools: MACD, averages, or stochastic were all created to help you in defining trends and their strengths. Traders basing their strategies on-trend always buy when the price goes up and sell when it goes down. However, they never make a transaction on the very peaks. The tools, mentioned above cannot recognize the trend in the very beginning, they need time to determine, whether it is a swing of a new trend or just a backwash of the previous one.
A horizontal trend or, in other words, a ranging market does not come hand in glove for traders. On the contrary, it makes them uncomfortable with their decisions, as the price in such a situation is ranging in a certain corridor and there is no clear trend. This situation is favorable neither for forbears nor for bulls. Therefore, everyone is waiting for the market to break through the corridor and denote a trend without venturing and making a transaction.
Trend following strategies guarantee success without any doubts, they represent the most profitable Forex systems. The only requirement is patience. These strategies fully pay off especially in the case of long-term players.
Trends last months, some of them even years. It is important that you follow the plan and do not deviate from the trend. In order to be a profitable trend following trader, you must be patient and possess significant funds in disposition. It might be the case that the following trend concept does not appeal to you, as it does not fit your strategy. You might be a short-term trader or just the one who does not want to rely fully on the trend.
Even in such a case, we still strongly recommend keeping the trend in mind, reassessing it, and making it one of your basic indicators. In such a way you will create a most profitable FX system. Keep and the idea of a big picture always in mind, even while considering a short position. Test your trading strategies on AvaTrade. Fundamental analysis tools are the ones built upon main market mechanisms: supply and demand forces.
Forex analysts basing their analyses on fundamental tools claim that prices are formed improperly at first. Only later the financial instrument is valued according to its real price. Unlike technical analysis, fundamental tools do not involve price log reasoning.
However, it still has common indicators with technical analysis, like support and resistance levels or trend following. Naturally, it does not rely on these indicators in the same way or on the same scale. In general, trading is more about technical analysis than a fundamental one. Technical analysis is of much more use and information provided, comparing to the fundamental one. The last one serves a supporting role and dominates as a tool only in some extraordinary strategies.
It is impossible to create a profitable Forex system, basing only on fundamental tools. Fundamental analysis gained huge recognition on the stock exchange market a long time before someone came up with an idea of price charts analysis and price models building. Of course, there is a huge difference between currency and stock exchange markets. And this is where the problem lies. The correlation in the stock exchange market is obvious: if the firm is doing well, its stocks prices increase while decreasing in the moments of downs or company crisis.
The order of things is much more complicated in the case of the currency exchange market. The same applies to other welfare signals. Let us present a couple of examples. Imagine a central bank decreasing interest rates as a response to a governmental decree issued. As an effect, the price of the currency decreases, stimulating export.
The economy improves, though, its currency is getting weaker. Another example represents an economic situation when the interest rate is near zero points. In such a case, the central bank implements an aggressive monetary policy and injects a huge amount of money into a turnover in order to slow down inflation.
Consequently, due to speculations on the market, most of the money ends up offshore, which leads to deflation, and currency strengthen. From the examples above, we can easily see that currency value is not that easy to define. It makes fundamental tools unreliable and impossible for traders to base on them fully. Fundamental analysis is considered as an additional review of the market situation.
Only together with technical analysis being a basis do they create a most profitable Forex system. Fundamental ideas supporters, however, created some interesting and unusual concepts, used in many strategies, which became the most profitable FX systems. We describe a couple of them below.
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3. “Profit Parabolic” trading strategy based on a Moving Average The strategy is referred to as a universal one, and it is often recommended. Forex scalping is a popular trading strategy that is focused on smaller market movements. This strategy involves opening a large number of trades in a bid to. Scalping involves making profits by taking advantage of the small intraday price changes. Scalpers make a target of 5 to 20 pips in every trade. Although the.