When adopting a successful trading strategy, this business must be viewed from the perspective that any business activity bears losses, risks, expenses, pressure, uncertainty, and volatility.
To start forex trading or stocks, it is necessary for an investor's mind when developing a stock or currency trading plan, which must be based on the market study, financial policy, and risk management. Entering and exiting trades with minimal losses.
The process is like the educational activity that we used to do during the beginning of our lives. There is a set of necessary knowledge and basic behaviors in this work, the neglect or inability of which leads to bad results that may even be catastrophic.
Therefore, this article will present the best successful trading strategy, whether when trading stocks or trading currencies (forex), to help investors achieve gains and develop capital.
Compare forex brokers to choose the best forex brokers.
Understand a set of rules that guide all types of traders (beginner or professional). When these rules work together, the effects are powerful, and the odds of success in the markets increase exponentially.
How To Develop a Forex Trading Strategy？
Always use a trading plan: a set of written rules that define criteria for entry, exit, and money management, and with today's technological development, it is easy to test a trading idea before risking real money.
Testing the application of trading ideas to historical data allows traders to determine if a trading plan is viable and shows expectations for the plan's logic. Once the test plan is developed and shows good results, the plan can be used in real trading.
What To Consider When Developing a Forex Trading Strategy？
Employing Technology
Using technology to your advantage and adopting the available technical developments is rewarding when developing a successful trading strategy in a competitive and rapidly growing and developing environment. Obtaining market updates through smartphones allows you to monitor deals from almost anywhere, even the technology that is today a matter Admittedly, such high-speed internet connections can significantly increase trading performance.
Protecting Your Trading Capital
This does not mean that there are no losing trades, but rather protecting your capital entails not taking any unnecessary risks and doing everything you can to keep your trades safe.
Only risk what you can afford to lose: Funding a trading account can be a long process, and before you start using real cash, it is essential that all the money in the account is expendable, that it is for trading only and is not borrowed from provisions for other important matters such as fees University or mortgage.
Think of it as Continuing Education
It is important to remember that understanding the markets and their intricacies is an ongoing process that requires you to learn more every day.
The easiest currency trading strategy
Making a profit is the similarity between currency trading and stock trading. Still, there are many differences between them in brokerage, analysis, market trends, liquidity, and the nature of contracts and deals, among others.
The value of a country's currency reflects the current and future economic situation of its economy compared to other countries. Thus profits result from the difference in the value of these currencies within the global economic scene.
The art of forex trading is based on looking at the charts, analyzing the support and resistance points that hover around the current price of the currency, and identifying the positions that have a risk of 10 points or less and a profit of at least 30 or 40 points. Then the investor should focus on the currency pair that is the most Actively, taking into account any important data about both currencies or one of them.
Since market conditions are always changing, traders will not be able to implement a single trading strategy on every daily occasion. There will be many cases where there are no breakouts, and the markets are confined to familiar ranges without any major impulsive moves. So, what should traders do in these cases？ Stay on the sidelines and wait for market conditions to change？
Unfortunately, one of the main facts of trading the forex market is that the market will never come to you. This means that the market will never change its behavior to meet trading requirements or investment criteria. The forex market is an active and dynamic place, so you should always be active and look for new opportunities as they develop. So, the next strategy we will be looking at will give traders some tools that are not available to independent traders. This next strategy is called the Swing Trading Strategy; this will enable you to see the trading opportunities when the breakouts occur.
To start this process, we will start with a working definition of what it means to trade in the forex market. Most traders would agree that Swing Trading involves using a stylistic trading method that looks to accumulate gains in a currency using short-term time frames, generally one to four days.“ ”Swing traders use technical analysis methods to look for currencies that are beginning to be reflected in Short-term price momentum. Generally, these trades will ignore fundamental information (economic releases or relevant news headlines) and instead look for short-term reversal points visible in the charts.
Methods for discovering the following market movement
What swing traders are looking for is to identify situations where a currency has an increased potential to make a significant move in a short period of time, and this requires an intelligent trading style that can respond quickly to changing market conditions. For these reasons, swing trading patterns tend to be used by home-end traders because large institutions tend to have larger position sizes than they do in these short-term trades.
For this reason, individual traders are in a better position to take advantage of these short-term trading strategies. Experienced traders often describe swing trading as an approach that falls between day trading and trend trading. A day trader will hold a currency for a few minutes or several hours - but usually not an entire trading day. At the same time, a trend trader may choose to analyze long-term trends and can hold positions from a few days to several months. Swing trading falls somewhere in the middle of these two approaches and will always depend on choosing the correct currency for this trading style.
Try in your trading strategy to reach two main goals:
Try to identify the potential trend as early as possible.
Try to find ways to confirm your direction and avoid mistakes so as not to suffer losses.
Remember the steps for developing your strategy skills,
Select the time frame that suits you.
Use technical indicators to spot trends early
Use indicators that avoid mistakes and confirm the trend.
Determine your risk and responsibility.
Determine the entry and exit points.
Write down the rules of your trading strategy system and follow them with discipline and accuracy.
There are Three Stages To Testing Your Trading System
1 - Go back to the experiment several times and move forward by drawing one candle at that time and direction and recording the rules of your strategy until you end up making profits from your strategy.
2 - If your strategy gives profits, you should practice for two months on a demo account trading program; this will give you a sound idea of implementing your strategy in a moving market. Trading with a real account is very different from a demo account.
3 - If the result of your two-month trial is profitable by more than 40%, then you are ready to trade with real money.
What Is The Best Forex Strategy for Beginners？
Creating a successful forex trading strategy can take a long time, sometimes even several years, so the best way to help you create your forex strategy or improve the one you have created is to know the popular trading strategies that traders rely on most Big in the forex market. Below are the most popular forex strategies used by traders.
Buy-and-Hold Strategy
The Buy and Hold strategy in the forex market aims to make a profit in the long term. The investor buys a currency pair and keeps his position for up to several years without paying attention to the price fluctuations of currencies in the short and medium-term. This strategy is characterized by its low cost and the lack of the trader's need to monitor currency rates constantly, often relying on fundamental analysis and macroeconomic metrics to make buying or selling decisions.
Intraday Trading Strategy
A forex day trading strategy is when a trader opens and closes several trades on the same day without leaving any open trade for the next day, even if the trade is a losing trade. Day traders rely on technical analysis techniques, analyze technical indicators, and trade volumes on time frames ranging from a few minutes to a few hours. This strategy requires a lot of time and the ability to monitor currency rates throughout the day.
What Is The Best Forex Strategy for Consistent Profits？
Scalping Strategy
Forex scalping (or scalping) trading strategy is a trading method similar to day trading, and it depends on opening and closing deals quickly, where the duration of opening deals may not exceed one minute in many cases; The trader aims to earn only a few pips on each trade and make many trades to increase the number of profits. This strategy is not suitable for many traders as it requires great speed of decision-making and reaction. This strategy is characterized by its high cost compared to other forex trading strategies due to the many deals that the trader opens and the need for large leverage.
Hedging Strategy
With a hedging strategy, a trader is not looking to make a profit as much as he wants to protect his portfolio from risk. Traders resort to this strategy to hedge against depreciation in a particular currency or to hedge against the risk of depreciation in the value of other financial assets they own. With this forex strategy, the trader usually opens both a long and a short position in the same currency simultaneously. Sometimes, financial derivative contracts are used, like options contracts.
Trend Trading Strategy
The trend trading strategy is part of the technical analysis methods of the forex markets. According to this strategy, the trader is trading with the trend based on the currency chart; This is done by buying when the trend is up or entering a short position when the trend is down. The upward trend is determined when each price bottom formed is higher than the one that precedes it; The same applies to price tops, where each top is higher than the previous one, while the downtrend is the opposite.
Range Trading Strategy
According to technical analysis, a price range is formed when prices in the forex market move sideways without forming a clear direction. The trader relies heavily on support and resistance levels, oscillators, and technical indicators such as the RSI for range trading in the currency market. Usually, this strategy buys when the price falls to the support level, which is the lower limit of the range, and sells when it rises to the upper limit, which forms the resistance level; A short trade is also entered when the price reaches the resistance level which is the upper end of the range to close the trade when the price of the currency falls back to the lower limit.
Momentum Trading Strategy
The momentum forex strategy is based on trading a currency pair that moves in a strong trend for a period, usually between 6 and 12 months. This strategy, which is also used in other markets, is based on the assumption that currencies that perform well will continue to rise for a longer period. With this strategy, the trader enters long positions on the currency pairs moving in a strong uptrend or short positions on the currency pairs that are moving in a strong downtrend.
Breakout Trading Strategy
The price breakout strategy in the forex market is based on trading when the price of a currency breaks through an important key level with large trading volumes because the price will continue in its formed direction for a period. For example, a trader would enter a long position when the price crosses an important resistance level for a particular currency pair. A trader can also enter a short position when the price breaks through a major support level.
Correction Trading Strategy
A correction trading strategy is based on waiting for a correction in the price of a currency pair to occur before entering any trade. And the rolling Who wants to enter a long position on a particular currency pair, waiting for a short-term pullback (corrective movement) before opening the position to reduce the risk. When selling short, the same can be done where the trader waits for an upward corrective movement before opening any position. Fibonacci retracements are the most popular tool among forex market traders to trade using price retracements.
Reversal Trading Strategy
The price reversal strategy aims to take advantage of the reversal of the price trend of currency pairs. When the price is in a downward movement, a trader who expects prices to rebound upwards opens a buy position with the understanding that the current trend will reverse and the currency will start to rise; On the other hand, the trader who expects the price to decline after it has been moving in an upward direction, enters into a short-selling position. Traders usually rely on technical indicators to look for signals of a price reversal in the market, such as the stochastic oscillator and the RSI, to predict changing trends in the market by monitoring overbought and oversold levels.
