When people talk about strategies in Forex trading, they mean a specific trading method that is usually just one side of a complete trading plan. While a Forex trading strategy only provides entry signals, it is also important to consider:
- Position sizing
- Risk management
- How to exit a trade
Picking the Best Forex Strategy in 2021
There is no single answer when it comes to clarifying the best and most profitable Forex trading strategy. It is hard to find the best FX strategies that will suit the individual. This means you need to try different methods and consider your personality to find a Forex strategy that suits you. What might work best for someone people might not work for you.
Conversely, a strategy that others have discounted may actually turn out to be right for you. Therefore, it requires experimentations to discover the Forex trading strategies that work for you. It might also remove those that don’t fit your needs. One of the critical aspects to consider is a time frame for your trading style.
There are several types of trading styles, starting from short timeframes to long timeframes. People have been using these styles widely throughout the years and remain a popular choice from the best Forex trading strategies in 2021. The best Forex traders always are aware of the different types and techniques in their search for how to trade Forex successfully based on the current market conditions to choose the right one.
They are considered very short-lived trades, held for a few minutes. A scalper tries to beat the bid/offer spread quickly and skim a few pips of profit before exiting and is considered one of the most advanced Forex trading strategies available. This strategy uses low timeframe charts, those found in the Supreme Edition package.
For scalping, MetaTrader 4 offers some of the best Forex indicators. The Forex-1 minute Trading Strategy is an example of this trading style.
These types of trades are exited before the end of the day. This strategy removes the chance of being adversely affected by significant moves overnight. Day trading strategies are considered standard in Forex trading strategies for beginners. Trades might last a few hours, and price bars on charts may be set to one or two hours.
Positions for several days, whereby traders aim to profit from short-term prices. A swing trader may look at bars every half an hour or more.
It is a Long-term trend seeking to maximize profit from significant shifts in price. A long-term trader might look at the end-of-day charts. The best positional trading strategies require discipline and patience on the part of traders. It requires good knowledge regarding market fundamentals.
Below is a list of the top Forex trading strategies discussed so that you can find the proper method for you.
50-Pips a Day Forex Strategy
One of the latest Forex trading strategies is the 50-pips a day Forex strategy. The EURUSD and GBPUSD currency pairs are considered some of the best currencies to trade using this specific strategy. After the 7 am GMT closes, and traders place two opposite pending orders or two positions. When the price movements activate one of them, it cancels the other position.
The profit target is 50 pips, and the stop-loss order is between 5 and 10 pips below or above the 7 am GMT candlestick after its formation. This is for managing risk. After these conditions, it depends on the market to do the rest. Scalping and Day trading are short-term trading strategies. However, it would be best to remember that shorter-term implies greater risk due to more trades taken, so it is vital to ensure effective risk management.
Forex Daily Charts Strategy
There is less market uncertainty when it comes to daily charts, more so than the Forex 1-hour trading strategy or even the lower timeframes.
Daily trade signals might be reliable than lower timeframes, and the profit potential might also be more remarkable. However, there are no guarantees in trading. Traders also should not need to be concerned about random price fluctuations and daily news. The method is according to three main principles:
- Locating the trend: Markets consolidate and direction. The process repeats in cycles. The first principle is to find the long, drawn-out moves in the Forex market. The way to identify a Forex trend is to study 180 periods of Forex data. Identifying the swing lows and last highs can be the next step. By referencing this price data on charts, you will identify the market direction.
- Stay focused: This process requires patience, and you have to get rid of the idea to get into the market right away. It would be best if you preserve your capital for an enormous opportunity.
- Larger stop losses and Less leverage: Be aware of the large swings in the market. Using more significant stops, however, doesn’t end up facing capital at risk.
For professional FX traders, there are plenty of trading strategy guides available, while you can achieve the best Forex strategy through extensive practice. Here are some more Forex strategies that you could try:
Forex 1-Hour Trading Strategy
In this strategy, you might take advantage of the 60-minute time frame. The most suitable currency pairs using this strategy are the USD/JPY, EUR/USD, AUD/USD, and GBP/USD. Regarding Forex trading strategies resources, the MACD is the most suitable option available on MetaTrader 4 and MetaTrader 5.
Forex Weekly Trading Strategy
Forex’s weekly trading strategies might provide more stability and flexibility, while Forex traders prefer intraday trading because of the market volatility providing more opportunities in narrower timeframes. It offers extensive market information. Weekly Forex trading strategies are based on avoiding excessive risks and lower position sizes.
Trend-Following Forex Strategies
When support breaks down and the market moves to lows, buyers begin to hold off. Buyers are noticing cheaper prices established and wait for a bottom. At the same time, there are traders selling in panic or building short positions because they are sure it can go lower.