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.

Speak Your Mind