Forex Trading Strategies That Work

Forex strategies that work are easier finding you might have ever imagined. The first thing you have to do is define what you mean by “work”. You can save a lot of time if you’re looking for the “holy Grail” of Forex such as a system that never has losing trades. The way can save a lot of time is to not look at all because no such system exists. Keep in mind that no one ever became rich in Forex trading by waiting around for the absolute “perfect” system. Now they were grounded in reality let’s discuss some real strategies.

Trend following strategies — Trend following is one of the easiest ways to profit in Forex trading. We use the term easy here loosely because the first thing we have to do before you can follow a trend is identify the trend. There are basically three different directions that th emarket can go, either up, down, or sideways. Trend followers look to profit in either up or down markets. We’ve all heard the saying “the trend is your friend”. This is the mantra that trend followers live by.

One simple method of trading with the trend is to trade using charts of multiple time frames. You can have your favorite indicator, such as moving average on each chart. For instance, you may have moving averages setup on each of a daily, 4 hour, and 15 minute charts. Assuming we are trading based upon the smallest timeframe to enter the trade we would go long when the price of the currency pair is above our moving averages on each of the three charts we mentioned. Using multiple time frames gives the trader the advantage of confirmation.

Our simple example above was done using moving averages, but the multiple time frame trading method can be done with indicators or without indicators. The multiple time frame strategy works great when used with breakout systems as well. This works well for entering both long and short positions.

When currency pairs are in a trading range, meaning that the prices are basically moving sideways you can profit using simple countertrend methods. A simple countertrend method would be to use support and resistance in the opposite way as may be used in breakout systems. In this case you would sell a currency pair when the price moved up to a resistance level and buy a currency pair when the price moves down to a support level.

Naturally, the above-mentioned examples of Forex trading strategies that work were for the purposes of illustration only and are not to be construed as an exact method to use. They are designed to give you a starting point for your own experimentation to find the right set of parameters for you.

What Is Forex Technical Analysis?

Forex technical analysis is a research method whose objective is to find profitable ways to trade Forex. This type of analysis differs from Forex fundamental analysis which has the same objectives Fundamental analysis looks at such things as the gross domestic product, interest rates, employment numbers, trade balance, and other important economic factors. Technical analysis, on the other hand, uses three basic sets of data in various combinations. The data that is analyzed is price, time, and volume.

Technical analysis is commonly used in order to create a Forex trading system. The system then takes the price, time, and/or volume data for a currency pair and generates Forex trading signals. These signals in turn are instructions telling the trader what action needs to be taken and when that action needs to be taken.

Forex technical analysis has really become popular over the last number of years. One of the reasons for this is the readily available data. The majority of Forex brokers offer free quotes and many even offer free Forex demo accounts which traders can use to practice their trading skills. There is also a wide variety of Forex trading software which makes it possible for more people to analyze the markets with greater ease and efficiency.

One of the basic tools that many used in technical analysis is Forex charts. A Forex chart is basically a graph of Forex data over time. Charts are great visual aid and allow traders to see Forex price movements. Using charts for your analysis lets you see where Forex prices are in relation to one another. This is particularly important because it will allow you to analyze past price data and find price patterns. Finding price patterns which are likely to repeat themselves can be particularly useful. For instance, if you locate a price pattern which tends to precede market movement in a certain direction, then you may really be onto something. The key is finding price patterns which reliably repeat themselves. In other words, you want to find price patterns that have a good probability of allow you to anticipate profitable market direction.

In my humble opinion the best way to learn Forex trading is to learn the ins and outs of Forex technical analysis. By learning to analyze the Forex markets you will learn to make your own Forex trading decisions. This will allow you to create Forex trading strategies which will be best suited for you and your individual lifestyle and financial situation.

Selecting The Best Forex Trading Strategies To Meet Your Goals

As the popularity of Forex trading has grown, the number of strategies has also multiplied. Simply defined, a Forex trading strategy is the plan designed to allow a trader to successfully participate and make a profit in the Forex market. Most trading strategies take the form of a software package that will either signal a trader when they should make a particular trade, or in some cases automatically complete the trade for the trader.

For those not willing to spend the time to create their own strategies there are alternatives. It is possible to purchase or lease a strategy, but a trader should learn the basics of evaluating a strategy before acquiring one. The following key evaluation points will serve as a guide:

Price: It is very important to know if the program has a minimum account balance. Some programs will only function if you start with a minimum balance as high as $10,000. If this is above the money you are willing to trade, it would be best to choose a different strategy. If the price is not clearly listed, it would be best to choose another strategy.

Account Risk per Trade: How much of your total account are you risking per trade? The higher the percentage of the account risk per trade, the easier a loss can cause you to be taken out of the game.

Total Net Profit: Total net profit is the sum of all trades completed during a certain time period. It is important that transaction costs be factored into this figure or the data will be misleading. Transaction costs can be high, so make sure all figures you look at have the transaction costs figured into them.

Percentage of Winning Trades: This evaluation measurement is frequently misunderstood. Many users assume they must have a have a high percentage of winning trades in order to have a profitable Forex strategy, however this is not the case. In fact, often Forex strategies advertising percentages between 95% and 100% are set that way to lure those with limited experience in Forex trading that don’t understand that such a strategy would be unsustainable.

Although strategies with high percentages of winning trades look good at first glance, usually these strategies have risked a lot and gained little. Most experienced traders would advise new traders to steer clear of these strategies.

These simple evaluation methods will allow you to pick the Forex trading strategy that is right for you. Remember to keep these in mind as you search for you Forex trading strategy, and don’t allow yourself to be taken in by scams. If it looks to good to be true, it probably is. Once you find a strategy you believe fits your needs, test it out with a free Forex demo account before risking real funds. If you are pleased with the results of the free demo count, then you can use the strategy to begin trading with your real account.