Great Forex Trading Strategy Methods Easy on the Pocketbook
You can actually learn several Forex trading strategy methods side-by-side with Forex day trading strategies. These are not always the same, however. Day trading is undoubtedly the most exciting of the different types of trading strategies you can use, but if you are in the Forex investment market for the excitement, you are going to get yourself into trouble. A Forex trading strategy that trades off the shorter-term price charts (M1, M15, M30 and even H1) is more difficult than longer-term prices charts (H4, Daily, Weekly and Monthly) as the longer the time period, the more reliable the indicators are. Using a stochastic, for example, on a M15 chart and getting a buy signal is not nearly as significant as using stochastics on a Daily chart and getting a buy signal.
The Position Trading
Forex Trading Strategy
Forex trading strategies include position trading, which is purchasing a currency pair and holding it for weeks and months waiting for it to move in your desired direction. For this Forex trading strategy, a Forex trader needs set a very wide stop loss, usually over 100 pips. Usually, these position traders trade off the daily, weekly or monthly charts. Because Forex indicators on a price chart tend to be more reliable on longer time frames, this may be the best Forex trading strategy to use.
Swing Trading Forex Trading Strategy
Swing trading is also different than other Forex day trading strategy methods. Swing traders purchase (or sell) a currency pair position and hold the trade for a few days to a week or so. Because they do not hold the trade for as long as position traders, their stop loss orders usually are about 50 pips. Swing traders used the hourly, 4-hour or daily charts for most of their trades
Day Trading (Including Scalping) Forex Trading Strategy
Forex day trading strategy systems include those strategies where a trader holds a trade from just a minute (or less) or for the entire day, getting out of the trade before the final bell. Scalpers enter a trade and then are out in mere minutes, and they usually trade off the 1-minute and 5-minute price charts. If scalpers do use a stop loss, it usually is very tight to their execution price, maybe within five pips. The Forex trading strategy is to make many trades per day, and try to end the day with about 20 pips profit. Some brokers discourage scalpers from trading with them, especially those brokers with dealing desks who try to make profit by trading against you, so you need to check you’re your broker first to see if they allow this type of trading. MB Trading, ACM Forex broker and many other reputable ECN brokers do all this, so you have plenty of options. Trading rules change frequently, so check with the online broker sites for Forex trades that are allowed.
Longer-term day traders usually trade off the 15-minute and hourly charts, which provide good profit opportunities throughout the day without the frantic and stressful trading sometimes experienced by scalpers.
Day Trading Forex Trading Strategy Methods to Evaluate
You will find many free and commercial Forex trading strategy systems from the 4 Hour MACD free Forex trading strategy to Stealth, but here are some day trading strategies for you to consider (and thoroughly test).
Forex Trading Strategy – GBPUSD Simple
- GBPUSD at 4PM CST U.S.
- In Excel, enter high and low of each day and divide by 2 to get ADR each day for 14 days.
- Get average for 14 days.
- If 14-day average daily range (ADR) is above 200 pips, enter buy/short one pip above/below high or low of day and put TP 50, SL 25.
- If ADR 175-199, take profit (TP) 40, set stop loss (SL) 20 pips.
- If ADR 100-174, then TP 30, SL 15.
- If ADR less than 100, don’t trade.
Forx Trading Strategy – Bollinger Band Bounce
- EurUSD H4, GBPUSD HI and H4 (all majors good)
- Forex calendar to check to make sure not trading during news announcements
- Go only in direction of trend
- Signal Bar – When there is a reversal bar off the middle Bolinger Band (BB) moving average line (MA), buy or sell one pip above or below signal bar and this is your entry. Can either not touch MA, touch MA, or slightly through MA.
- Trailing stop 1 pip below lowest low or highest high of last 4 bars
- Exit only with trailing stop
Forex Trading Strategy – Bouncing Pip
- EurJPY HI or GBPJPY H4
- Forex Calendar for news announcements (never trade during news)
- Signal Candle – Best if wait for arrow and ziz zag line on H4, then see signals on H1 and M30.
- Use MF1 to confirm OB or OS condition
- When Entry Bar is right, HA color and in your direction, then enter.
- SL above high or low of Signal Candle, or:
- EurJPY HI SL 30
- GBPJPY SL 60
- Can add to positions after short-term retracement, or just get out on retracement.
Where Do I go to find What Forex Trading Strategy Acronyms Mean?
The best Forex trading strategy that works great for one trader may not work at all for another. We have different risk aversion, different temperaments, and should adopt different trading strategy Forex methods. This site is not about fundamental training in Forex, just some simple ideas to consider when entering trading as a possible career. Some of the acronyms in the trading strategies Forex systems above have purposefully not been explained, although experienced Forex traders will know what they mean. You need to first invest in your own Forex education if you don’t understand any of the trading concepts above. A great place to start is BabyPips.com, as you will learn all the fundamentals of Forex trading (you may not find HA at BabyPips, but can find it on the forums or searching on “Forex HA”).