Before discussing the best forex trading strategies, let us discuss what exactly is a forex
trade strategy. A forex trading strategy is an approach through which a trader can examine whether to sell or buy specific currency pairs during a specific period of time There are various methods on which a trader can base his forex trading strategy, such as, technical analysis, fundamental analysis or chart analysis. Traders usually take trading signals to evaluate whether to buy or sell currency pairs. Creating a Forex Trading Strategy
Creating a strategy for Forex trading may be started with considering something simple. For instance, noticing a currency pair that is likely to be rebound from particular support in the first place and then deciding to add elements to increase the accuracy. There are numerous factors that can contribute to an effective forex trading strategy:
Selecting Market- To start with, traders must select the specific currency pair they want
to trade and observe and understand those currency pairs.
Analyse Size- Traders must analyse the size of each position in order to evaluate the
risk associated with it for the trade.
Entry Points- Traders must determine when to enter in short or long positions pertaining
to a given currency pair.
Exit Points- Apart from entry points, traders need to set rules for the time when to exit
from short or long positions and when to exit to avoid losing, as well. 4 Hour Forex Trading Strategy
4 Hour Forex trading strategy is known to one of the most profitable strategies. This strategy makes use of a 4 Hour base chart to assess trading signal locations. One thing to be aware of is that the time frame of the signal chart should be lower than base chart by at least one hour. Afterward, two sets of MA lines are chosen, from which one will be 34-period MA and the other will be 55-period MA. MA line when related to price action helps in ascertaining whether a trend is worth trading.
Following conditions are fulfilled in an uptrend:
The price will remain above the MA lines
The 34-MA line will be above the 55-MA line.
In case of an uptrend, there is maximum duration for which MA lines slope upwards.
Following conditions are fulfilled in a downtrend:
The price will remain below the MA Lines
The 34-MA Line will be below the 55-MA line
In case of a downtrend, for the maximum duration MA lines are sloped downwards.
Forex Weekly Trading Strategy
Forex weekly trading strategies are known to be more adaptable and stable than intraday
strategies. This is because due to market volatility, opportunities soar during the narrower time frame. This strategy proves to be potential as substantial market information can be acquired through weekly candlestick. Five daily candlesticks provide information while changing with market tends during the week. The strategy focuses on avoiding excessive risk. Exponential Moving Average (EMA) Indicator is taken into consideration for this strategy. The previous week's last daily candlestick is supposed to be closed at a level which is above the EMA Value. Afterward, there is a need to look at the time when the previous week’s maximum level was broken. Then at the price level of a broken level, a buy order is laid on H4 closed candlestick. Somewhere between 50 and 105 pips, the stop loss is placed at a minimum point. The nearest minimum point is calculated by taking previous extreme value if the former is closer than 50 pips. 1 Hour Forex Trading Strategy
This strategy focuses on the 60-minute time frame. In the 60-minute time frame, the currencies pairs that are easier to trade are the EUR/USD, USD/JPY, GBP/USD, and the AUD/USD. For this strategy, you need 100 pipe momentum indicator and indicator arrows which are available on MetaTrader 4.
Buy Trade Rules:
To enter a long position, the following conditions must be fulfilled
When the blue line of 100 pips momentum crosses the red line from BELOW, indicator
triggers a buy signal
The Indicator arrow gives a green arrow signal In this situation, traders can set stop-loss BELOW the red indicator line or the recent support line. Moreover, the trade can be closed after 30 pips or profit can be acquired when indicator arrows give a red arrow signal.
Sell Trade Rules:
To enter a short position, the following conditions must be fulfilled:
When the blue line of 100 pips momentum crosses the red line from ABOVE, indicator
triggers a sell signal.
The indicator arrows give a red arrow signal In this situation, traders can set the stop-loss ABOVE the red-indicator line, or the most recent resistance line. Moreover, the trade can be closed after 30 pips or when indicator arrows give a green signal.