Choosing the best strategy to start trading is a task that requires your attention and that you dedicate some time, since this depends on your success in the market.
In addition to that you must have your active “arachnid sense” to know how to differentiate those charlatans who may only want you to use a strategy to play a trick on you, or it may also be that they are not aware of it and use strategies that ultimately only bring problems. Without a strategy you are totally lost and you will not have a destination or steps to follow. The strategy gives you discipline and responsibility so that you can order not only your life as a trader but also in the other aspects of it, in this way you will not leave loose ends and your way of trading will be more polished.
Before you start taking a walk through the different trading strategies and those that we consider are good or bad, first we will give you a small guide of the things you should consider before choosing a strategy.
What to consider?
- Study your time and effort level: You must take into account the time and effort you are willing to invest in this business. If it’s a short time, it doesn’t matter, since you can divide your time and organize. But if it is little effort, then this is not for you. Forex trading requires effort on the part of the trader so that everything is done correctly, doing it differently will not work. This will also reach certain conclusions, for example, if you do not have as much time as you would like, you will not be able to use the scalping strategy (which we will analyze later) since it requires that you stay in front of the computer for a long time.
- Have in mind your personality: Your personality is a key part when choosing your strategy. You should know if you are a patient person, or if you like to be methodological or if you prefer to decide things on the go. Are you willing to lose any amount of money? How do you react to losses of any kind?
All these things influence the strategy you choose, remember that although you can change your strategy, it is important that you are on your way and have done a good self-exploration.
- Don’t forget the risk: The risks that are assumed in trading are large regardless of the money you invest, since it is your capital and it matters. That is why you must be willing to possibly assume large losses of money in the hope of having bigger profits.
- How can you get right into the market?: The indicated strategy will give you easier access to the markets in which you want to trade. For example, there are some brokers that may have certain limits, so some strategy may not work the same in any broker.
Now that you know all of that, it is time to check a few strategies that may work for some traders and other strategies that are not the ones we recommend.
The best strategies in the Forex trading
The Right strategy must be great within some aspects, such as size position, ways to exit a trade and risk management.
Also, just as we said before, the best strategy suits perfect with the trader personality and its needs. Throughout the Forex market you will find tons of people claiming that the strategy they use is the best of all, just because it works for them, but we all know that the market doesn`t work that way and it is changing all the time. These next strategies work in a general way for various traders, take a look at them.
- Forex weekly trading strategy
In the Forex market, intraday trade is generally preferred because it generates more opportunities due to market volatility.
lykwols, weekly strategies offer you a much more flexible schedule, in addition to having the trader in a much more stable position than an intraday strategy would.
This strategy is one of the simplest; to begin with, use the exponential moving average indicator. Then, the last daily candle of the previous week must be closed at a specific level, which must be greater than the value of the exponential moving average, it is important that this be so. Then, at the time the maximum level of the previous week is broken, you must place a purchase order in the closed candlestick H4, and this in turn must be at a certain price level(which is mostly the broken level).
- London hammer trade
This strategy has a clear objective, and is to produce profits through various opportunities that arise in the market as a result of the additional volatility obtained when London enters into action. This type of strategy is quite specific since it is more effective when the London session begins, the price may also take off sharply in one direction and this must be taken advantage of.
- Forex 1- Hour trading strategy
This is one of the best known strategies and is so famous because you can take advantage of a full hour in the market, with its volatility, at a specific time. There are several pairs of currencies that are specifically very good and behave excellent with this strategy, for example EUR / USD, USD / JPY and AUD / USD.
In this strategy there is a lot of use of indicator arrows, which you can follow on the MetaTrader 4 platform. When the Momentum 100 pips indicator you can apply the strategy, you must activate the buy signal, and once this is done the blue line will be ready to cross the red line from below, the graphics will help you understand this better.
Then, put the stop loss just below the red line of the indicator. And so you will be ready to close the operation after 30 pips.
The Worst trading strategies in the Forex market
The worst strategies haunt every trader through the market, and usually it gets to every newbie, since they don´t have enough experience to understand how everything works.
- Trading too many pairs
We think that by logic, if we trade more currency pairs, we can produce good and better profits. But logically it is also sensible to think that if trading a currency pair can become tedious, complicated or requires a lot of our effort or time, then many currency pairs would be much more difficult. To be able to trade a currency pair in the right way then that pair must be studied and monitored by the trader, understanding that it has a movement that differs from the other pairs is extremely important.
Once you have fully understood how one of the coins and its pair works, then only then can you be prepared to work with another at the same time.
You can not fall into the delusion that if you keep trying at some point you can achieve something, understand that discipline is the most important thing in a strategy will make you realize that this strategy is low in discipline.
The martingale strategy is based on the idea that you should double your bet once you have lost a considerable amount of money and operations, so based on the probability, you should cover your losses with winning bets (or that should win) doubling the profit at the same time. What this says is that you can eventually replenish your earnings if you continue to trade, even with money you don’t have.
Dit “strategy” is very similar to what players usually do in casinos, which only keep betting until they win. There is no need to explain why this is a bad idea.
Special mention: The scalping strategies that are applied by hinting at 5 pips or less.
These types of strategies make you feel confident since they give you a kind of power that you don’t really have, playing with all those pips under 5.
But what you do is dig your own trading grave, it is simple, if a winner of 4 pips arrives then the market will move to 5 pips in order to cover the commission, then here he loses 20% of his profit.
And among such small losses, in the future you will realize all the money you actually lost if it was significant.
It is important to remember that all strategies can be bad if the trader don´t know how to use them or if they choose the wrong strategy according to its personality.