Here we are going to look briefly at 3 forex trading strategies anyone can use quickly. There simple to understand easy to use have worked and will continue to work and that means big long term profits.

Let’s look at these forex strategies and why they work…

Many traders make the mistake of thinking that the harder they work and the more complicated they make there trading strategy the more likely it is to work but there is no correlation between working hard and being complicated and forex trading success; you are simply judged on your market timing and the success of your trading signals.

A simple strategy will have fewer elements to break than a complicated one in the brutal world of forex trading and keeping it simple is always best.

Strategy 1 – Long Term Breakout Trading

FACT:

Most major trends start from new market highs or lows.

This is one of the simplest and most effective ways of trading, buying breakouts on the chart to new highs and selling new lows. Most traders cant do it, because they think they have missed a bit of the move and want to wait for the pullback but in strong moves, this never occurs and they are left watching the move pile up thousands of dollars and their not in.

If you focus on long term valid breakouts and time your entries with a couple of momentum indicators, you can make a lot of money. The key to this forex trading strategy is only to use levels that are considered important by the market.

They occur a few times a year per currency but lead to huge moves and huge profits.

Strategy 2 – The 4 Week Rule

This is one of the simplest most profitable, forex trading systems you will find and was devised by trading legend Richard Donchian. It will make sure you get in on EVERY major forex trend.

This sysmre is totally mechanical (and based upon the breakout philosophy discussed above) and consists of just one rule:

Buy a new four week calendar high and sell a new 4 week calendar low and maintain a position in the market at all times.

That’s it!

Simple? Yes, but it works – back test it and see.

You can also add filters to smooth the equity curve which are discussed in our other articles.

We have used this system as part of our forex trading strategy for over 20 years and many great traders have been fans, such as Richard Dennis so, if it’s good enough for him, its good enough for you and me.

Strategy 3 – Trading Overbought Oversold

The two other strategies just discussed are long term now, we will look at a short term strategy for profit – forex swing trading.

Swing trading simply aims to take advantage of overbought oversold scenarios within the major trend and you can do this with simple trend lines. All prices get pushed to far up or down, due to greed and fear and you simply want to trade into these extended levels.

Once you have identified areas of support or resistance, check volatility with the Bollinger band and then use the ultimate timing tool – the stochastic to confirm the move.

You then should take your profit early and then look for the next one.

Swing trading is fun, requires very little discipline, as you don’t have to hold moves for long and can be learned in a few days.

So there you have 3 simple forex trading strategies for profit which are simple but don’t think they can’t be profitable, they are and can lead you to long term currency trading success.

So make the above part of your essential forex education and get on the road to profits.

If you want to win at forex trading you need a forex trading strategy that can help you enter the elite 5% that make money and avoid joining the vast majority of losers.

This article is all about devising a forex trading strategy for success in 5 simple steps.

1. Accept Responsibility

The first point to keep in mind is that you are responsible for your own success – if you think you can buy success from a vendor for a few hundred dollars – you are going to lose.

Only you can make yourself successful and this means you have to develop your forex strategy on your own. The good news is, everything about forex trading can be specifically learned and is free on the net.

2. Learn the RIGHT knowledge

Forex trading is all about learning the right knowledge – This is an important point, many traders simply think the more the better in terms of knowledge, but this is simply NOT true.

You get rewarded for results in currency trading and the accuracy of your trading signals, not the effort you make.

Your forex trading system that you use in your trading strategy should be kept simple and easy to understand. This way, ensures it will be robust in the face of ever changing market conditions.

Simple systems work far better than complicated ones and have the added benefit of being easy to understand by you – This means that you will have the confidence to follow it with discipline.

3. Deciding Your Methodology

You will need to decide if you want to a technical or fundamental trader.

By far the easiest is to be a technical one and use forex charts to spot trading opportunities.

You need to get the odds on your side and this means NO forex day trading!

It doesn’t work, as all short term volatility is random. Instead, base your forex trading strategy on swing trading, or long term trend following.

Both these methods will work and the one you choose is personal preference.

You then need to have a clear understanding of support and resistance and some momentum indicators to help you get into trades ( this is covered in our other articles )essentially you need to confirm price momentum is on your side when you trade.

Finally, learn the concept of “breakouts” it’s a timeless very profitable methodology.

4. RISK and Money Management

If you don’t like risk don’t trade forex markets. Most traders don’t understand risk and are so frightened of it, they end up being to cautious and lose.

If you want to make money you need to take calculated risks, at the right time.

You need to have the courage of your conviction. If you come into forex trading thinking you can risk 2% of your equity and make money do something else, as you will lose.

5. Trading is in the head

Most traders fail because they cannot obtain mental discipline, to follow their forex trading system through bad periods i.e. they lack discipline due to lack of confidence.

If you develop your forex trading strategy yourself, you will understand exactly how and why your system works – this will instil confidence and from confidence flows discipline.

Keep in mind if you don’t have discipline to follow your system you have no system!

6. Realism

Sure people get rich quickly but that’s the norm for most currency traders.

You need to have a realistic forex trading strategy and that means aiming for 50 – 100% per annum.

If you can achieve this you will be up there with the best and this will compound to a lot of money over time.

REMEMBER!

You don’t need to buy any material to construct your forex trading strategy, its all free online.

You just need to research it and avoid people telling you that you can buy success from them, for a few hundred dollars – you cant, there are no shortcuts

The good news is, everything about forex trading can be specifically learned and you can do it all on your own, if you are prepared to put in a little time and effort.

If you are devising a Forex trading strategy and using technical analysis you will need some indicators to help you execute your forex trading signals and below, we have outlined six essential indicators that any trader should consider using on their forex charts.

1. Moving Averages

A great back indicator to trend lines for seeing the direction of the trend.

Moving averages should not be used on their own to enter trades but combined with other indictors.

Moving averages in longer term time frames work best and I find the 200 day MA important and also use the 40 day and 18 day MA useful. Never use short term averages as trends need sufficient periods of data to be effective.

2. Bollinger Bands

If you want warnings of trends developing, or a tool to help you sell high volatility to execute trading singnals i.e. open new positions or to lock in profits, then Bollinger bands are ideal.

Like moving averages, this indicator is simply there to show you the opportunity and you should time your entry with other tools.

3. Net Trader Positions

This is simply one of the best tools there is for spotting the big contrary trades and is realized bi-weekly by the CFTC. Although it applies to futures markets, the data can be used for spot currency markets as well.

This tool will help you spit every major trend change in advance.

The reason for this is, it breaks the open interest in speculative and commercial positions.

We don’t have room to explain the full logic here – but in essence speculators are always heavily net long at important market turning points while the commercials ( smart money ) are short.

By looking for divergences in speculative and commercial positions and looking for extremes, you can spot the big turning points coming.

So far we have looked at tools that can alert you to trading opportunities in your forex trading strategy – now, its time to look at some indicators to time entry on your forex charts and we have picked out 3 of the best.

4. Stochastic

George Lane, who developed the indicator, concluded that in an uptrend, prices tend to close near their high, and in a downtrend market, prices tend to close near their low.

This may sound simple, but the stochastic is simply one of the best momentum indicators out there for entering trades and taking profits.

5. Relative strength Index (RSI)

This indictor complements the above indicator perfectly and is another superb indicator to have in your forex trading strategy.

The RSI, as its name implies measures the relative strength of price currently compared to the past and gives you an idea of how strongly a market is trending.

This is one of the most popular momentum indicators in the world and was developed by trading legend, Wells Wilder as is the next indicator

6. Average Directional Movement (ADX)

The ADX is a momentum indicator, which aims to measure the strength of the trend – and attempts to determine if the market is in a trend or not.

The ADX line is a great momentum indicator and will help you trade the strongest trends – and give you advance warning of changes in momentum for profit taking or contrary trades.

So there you have six great technical indicators to incorporate in your forex trading strategy. There are of course others worthy of consideration, but these 6 are the ones I have used for the last 25 years and found them highly effective in my own forex trading systems and think you will to.

Take a look at them and see for yourself – Good trading

If you want a successful FOREX trading strategy, you should incorporate the following tips into your existing strategy – you should then become a profitable currency trader.

The aim is not to just to make money, but to make big profits consistently.

Six Essential FOREX Trading Strategy Tips:

1. Get a Method you have Confidence in

You need to have total confidence in your method – so you can follow it with discipline.

Pick a simple, technical method – simple methods work best, as they’re more robust in the face of brutal market conditions – complicated methods tend to break.

Just use a few rules and parameters, and they should work across all markets – a technical trading system should work on ANY market that trends.

2. You need to have the Mindset to Take Risks!

You will read a lot about money management – but keep in mind risk = reward.

If you don’t take reasonable risks, you won’t make big profits.

2% is a commonly touted figure to risk per trade – but if you’re trading $10,000 that’s just $200.

Risk more if you’re confident – 10% is fine – you just need to be selective with your trades. You can have the best FOREX trading strategy, but you need to take calculated risks to make big gains.

3. Don’t Trade Frequently

The good trades only come around a few times a year, so focus on them.

Many traders think there are good opportunities everyday – there aren’t.

There’s no correlation between how often you trade, and how much money you will make – if you want to make big profits, you need patience.

4. Only Focus on the Long Term Trends

Forget day trading, and focus on the longer-term trends only – how can you make big profits in a day? – You can’t. Don’t forget you have to cover your losing days as well.

Always remember – brokers interested in making the maximum amount of commission, perpetrate the make money by day trading myth.

Currency trends last for months or years – focus on them, and milk them for all they’re worth.

5. Trade in Isolation

Don’t discuss your trading with anyone – the only way you’ll make big money is by doing it by yourself.

Have confidence in your ability and don’t let anyone put you off – this is an essential character trait of all great traders.

6. Work Hard not Smart

Many losing traders think the more effort they make with their FOREX trading strategy, the greater their trading skills will become – this is not true! You can learn a method in a short period of time, and if you have a simple robust method, you can do your analysis in about 30 minutes a day – and that’s it!

A Strategy for Big Gains

So there you have it – a FOREX strategy designed to make you big profits.

Many of the above tips are not conventional wisdom – but keep in mind that 90% of traders don’t make big gains – and they follow the herd.

Step away from the crowd, and incorporate the above tips into your existing FOREX trading strategy – you could become very rich!

As a trader, you must develop a Forex trading strategy that will allow you to quickly identify flaws and make adjustments while continuing to trade. A classic approach used to evaluate risks in the currency trading system is the inverted pyramid approach. All macroeconomic factors that affect a chosen currency pair are a function of the top of the inverted pyramid. All technical factors are considered as you move down to the bottom of the pyramid. Traders assign weight to different parts of the pyramid. Purely technical traders may apply more weight to the bottom of the inverted pyramid (upside down triangle) while fundamental traders may apply more weight at the top.

In order to make use of the inverted pyramid you will need to understand the macroeconomic factors that are a function of the top of the inverted pyramid. These include international issues that influence the global trading community. These types of issues may be gauged from news reports and news feeds with global coverage. News networks, such as CNN, provide up to date coverage of terrorism, oil prices and other such issues.

In order to account for the technical factors that apply to the pyramid, you will need to determine specifics and sediment in the particular market within which you are trading and also for any market that impacts the market within which you are trading. You must decide the type of technical indicators that will be used in your Forex trading strategy. Some traders rely upon randomness and chance while others engage more complicated mathematical computations to calculate weighted moving averages. You must be able to develop and visualize a picture of the market, which identifies events that are of importance to affect the market. You also need to develop a general feel about the market. News reports and specific market reports will assist you in developing a picture of the market and also indicate of the direction in which the market is headed.

You will need to determine which currency pairs are volatile in relation to the macroeconomic environment and market conditions that have been identified. You will need to have knowledge of the market in order to identify and differentiate market indicators from events that bear no real significance. Your analysis of acquired data should indicate whether price movements represent a trend or volatility in the currency trading system. You will then be able to use this analysis to narrow your options to trades that offer the most potential.

You must be able to set floors and ceilings in your technical analysis to establish trading levels and then use those levels in your Forex trading strategy. Technical patterns that indicate the direction of trades in specific currency pairs should be developed. Once you have narrowed down to a specific currency pair for trade, you will then need to reexamine its market sediment as it applies to the technical analysis. You will have to identify entry and exit points for your chosen trades.

Learning Forex trading strategy is not a simple task, but in no way it is difficult either. Forex trading is all about regulation, willpower and determination. Leveraging your strength could be extravagant by organizing the apt trading strategy. Forex trading strategies are the key to successful trading or online currency trading. A knowledge of these trading strategies can mean the difference between a profit and a loss and it is therefore imperative that you fully understand the strategies used in trading.

Forex trading is very different from trading in stocks and using strategies will give you more advantages and help you realize even greater profits in the short term. There are a wide range of trading strategies available to investors and one of the most useful of these trading strategies is a strategy known as leverage.

This strategy is designed to allow online currency traders to avail of more funds than are deposited and by using this strategy you can maximize the trading benefits. Using this strategy you can actually utilize as much as 100 times the amount in your deposit account against any trade which will make backing higher yielding transactions even easier and therefore allowing better results in your trading.

The leverage strategy is used on a regular basis and allows investors to take advantage of short term fluctuations in the market.

Another commonly used strategy is known as the stop loss order. This strategy is used to protect investors and it creates a predetermined point at which the investor will not trade. Using this allows investors to minimize losses. This strategy can however, backfire and the investor can run the risk of stopping their trading which could actually go higher and it really is up to the individual trader to choose whether or not to use this forex trading strategy.

An automatic entry order is another of the forex trading strategies that is commonly used and this strategy is used to allow investors to enter into trading when the price is right for them. The price is predetermined and once reached the investor will automatically enter into the trading.

All these forex trading strategies are designed to help investors get the most from their trading and help to minimize their losses. As mentioned earlier knowledge of these strategies is vital if you wish to be successful in trading.

Take the time to actually understand the forex trading strategy. Study the components independently so a deeper understanding of the strategic mechanisms would be mastered. If you recognize the components, internalize its use, and make consistent profits into your trading account, then you have your own Forex trading strategy. It does not really matter what the professionals say, your account balance is the final judge and judges for your strategy.

As you know, the only way to make money in the forex currency exchange market is to have profitable forex trading strategies and good money management. Without these two skills, you will certainly fail as a trader and if you master these, you will be a very profitable forex trader.

It sounds so easy, doesn’t it? Two simple rules to follow and you will be profitable in this business. The problem with this however, is that most people can’t follow these rules. They let their emotions get in the way of their trading and make bad decisions. They may not take any trades at all because they’re afraid they’ll lose money. They may be in a profitable trade and decide to close it early to lock in their small profits. They may decide to let their losers run longer than they should because they “know” the currency is about to reverse and go in their direction. There are many reasons why people fail in this business and these are just a few of the examples.

Before you start trading, you need to learn about this business. You not only need to learn how and when to trade forex, but you also need to know when “not to trade”. This is just as important. You also need to know how much “risk” you should take on any given trade. If you over leverage your account, you will lose money very quickly and you could actually blow your entire trading account.

Once you learn how to trade, the next step would be to open a forex demo trading account. This is the trading platform you would use from the forex broker of your choice to make trades in the market. Most forex brokers have all the charts and tools you need and the platform on which to execute your trades. Demo accounts allow new forex traders to trade fake money while trading the live market. You get to trade on a live trading platform but you risk absolutely no money. There aren’t any businesses I know of where you can learn everything you need without costing you a dime.

Demo accounts are a great way for new traders to get a feel for trading the forex market without risking any money. But be careful. When you trade a forex demo account, and you know in your mind that you have no money at risk, you can start making stupid trading decisions. You may use poor money management skills and risk far too much money on each trade. You may double up on trades to make up for losing trades. These are bad habits, and the last thing you want to do in this business is treat it like a game. It’s not a game. It’s a real business and should be treated as such.

Before getting into trades, you should also know exactly what price you’re getting in to the market and also know what your stop loss and take profit targets should be. If you don’t know these three things, do not trade. Every profitable forex trading strategy you learn will have the rules for determining these entry and exit points. Also know that a profitable forex trading strategy does not have to be complicated. Most of the best forex trading strategies are very simple to learn and use.

If you follow the simple rules we mentioned above, you will see how profitable this business can be. It’s no wonder why trading forex is becoming one of the fastest growing home businesses today. You get to work from your home using your personal computer and an internet connection. Pick up a great forex trading strategy and open up a forex trading account with a broker and you have everything you need to start trading.

The Forex trading strategy we are going to look at here is not complicated and anyone can do it, but if it is executed correctly it can make you triple digit gains or more with very little effort or monitoring.

So here is your simple forex trading strategy for big gains.

Fundamentals

The first place to start is with the fundamental supply and demand situation.

This sets the tone for the longer term trends that last for months or years and these are the trends you want to be in on.

Currencies move in line with these fundamentals longer term and you are really looking for strong GDP growth. If you look at the currencies that did best against the Dollar this year its countries with strong GDP and Australia led the pack against the dollar.

Two Countries that have economies that doing well compared to the US at present are Australia and Canada and these are set for far higher prices into year end.

Getting In on The Action

Currencies trend for years we all know that but its getting in on the trends that is the hard part and your aim is to get in and then simply hold the trend.

Any currency that is bullish will become overbought at some point and break and when these breaks come you buy them

Use Sentiment tools

Always use these two sentiment tools – Net Traders Positions and % Bullish to check that sentiment is not in over bought territory when you enter the trade. Start with your weekly charts and loo k for support and time your entry with your daily charts.

Risk – Reward

Don’t over do the leverage!

You can get 200:1 but on a trade about 10:1 is fine for a buy and hold strategy.

What you are going to do then set a stop and leave the currency alone.

Hopefully it will trend for months and make great gains if you have been careful in your selection.

That’s your Forex trading strategy! It’s extremely simple but it will make money if executed correctly.

The real key is not to overdo leverage have a wide enough stop, so you are not taken out by normal volatility and let the trade run.

There are some excellent trading opportunities around that will enable you to do the above so take a look at them and try it.

Once you’ve identified a trading opportunity, the next step is to decide EXACTLY when to buy – and this is where many traders go wrong.

Here we explain how to incorporate better market timing into your FOREX strategy – so that you can make bigger profits.

Most traders time their entry levels incorrectly, so here’s the right way to do it:

Using Support and Resistance Correctly

A basic wisdom of market timing is “buy low, sell high” – well, the reality is, if you try this in FOREX trading, you’ll end up losing money. First, let’s define what support and resistance means

A support level is a historical price that traders come in, and buy to “support the market” – and the more times it’s tested, the more valid the support will be.

Conversely, a resistance level is a level on the charts that “resisted prices from moving higher”- again the more times it’s tested, the more significant it becomes.

Why Buy Low and Sell High doesn’t Work

“Buy low, sell high” is accepted wisdom by the majority of traders – but this logic is fundamentally flawed – use it in FOREX trading, and you’re asking for trouble. Why? – If you wait for a pullback, you’re going to miss some of the biggest moves.

Think about it – what if a currency starts to trend and doesn’t pullback? (How often have you seen this?) If you’re waiting for a pullback that never comes, you’ll never get in on the trade – and you’ll miss a major opportunity.

You Need to Feel Uncomfortable

When Trading in the FOREX market, you should usually feel uncomfortable (and that’s why most traders don’t make these trades) – as no one likes to buy or sell after the market has started trending – but doing this will make you money.

The fact is, the more comfortable you feel when entering a trade at support, the less likely the trade will be a big winner.

During any given year, most of the big moves in currencies, take place from new MARKET HIGHS with NO pullback.

If you base your FOREX Trading strategy around waiting for a warm comfy entry, at key support, you’re going to miss the biggest and most profitable trades – so step away from the losing majority of traders.

Your FOREX trading strategy should give you a different mindset – most traders “buy low and sell high” – so you should “buy high and sell higher” – i.e. you should be doing the opposite of what the crowd are doing.

Don’t worry – most traders lose money, and their FOREX Trading strategy is based on the flawed logic we have just discussed – so not doing what they do makes total sense. Therefore, look for breakouts through support and resistance – and sell and buy respectively.

Its Tough Mentally – But it Makes Money!

Sure, it’s hard to do – the majority don’t agree with you – and no one likes to go against the majority. However, it’s the right thing to do, to make your FOREX trading successful. Think about what we’ve just said, and you’ll see it makes logical sense.

Has this Happened to You?

How many times do traders buy into support, and the market breaks support, stops them out and continues to decline. On the other hand, another common scenario is, price never get to support – it simply goes higher – and the trader misses the chance to get in on the trend.

This type of trading is tough mentally – that’s why 90% of traders don’t do it – they want to be comfortable – well being comfortable is great, but you’ll lose money.

Breakouts work, and if you use them in your FOREX Trading strategy, you won’t be comfortable on entry – but you’ll make money – and that will more than compensate.

The way to succeed in FOREX trading is to do what the losing majority don’t do – then you can join the elite 10% of traders who make the big profits – try it and see!

Many new forex traders think the core of a forex trading strategy should be predicting where forex prices will go. Try it and you will lose, you will win if you trade in a different way so why is prediction not the way to make money? Let’s find out.

If you are predicting you are in effect hoping or guessing which is not a way to make money in any venture let alone forex trading. You cannot predict the future and if you try, your predictions will be as accurate as your horoscope.

There is however a big market in people who say they can predict and many theories that say you can such as Elliot wave, Fibonacci and Gann.

They argue that as human nature is constant so the markets must be as well.

However if you think about it this logic is obviously not true, because if markets were predictable with science, we would all know the answer in advance and there would be no market.

Markets move based upon uncertainty and while human nature is constant, it is not predictable with science – trading is a game of odds not certainties.

If you want to win you trade the reality of price change and don’t try and guess in advance.

For example if you see a market testing a level of resistance you do not simply enter a trading signal – if you do you are trading against the trend and you could be wrong.

Instead you wait for prices to test resistance and wait for prices to turn back the other way.

Sure you miss the turn – but you couldn’t predict that anyway, so there is no point trying!

How do you know when to trade.

The secret of correct market timing is using momentum oscillators. There are many you can use and three of the best are: RSI, ADX and the stochastic indicator.

We don’t have time to go through exactly how they work here simply look at our other articles and make them part of your essential forex education.

The key advantage they give you with your forex trading strategy is they allow you to gauge shifts in price momentum. You can use these shifts, to allow you to trade the reality of a price change to achieve better market timing and more forex profits.

The forex traders who rely on prediction lose and are generally naïve or greedy traders who think forex trading is simply a walk in the park – its not and neither would you expect it to be.

The real pro forex traders don’t rely on hope or guessing or attempting to buy market tops or bottoms they look at and trade the reality of price change.

The way to succeed in forex is simply to look at support or resistance and time your entry on shifts in momentum and you should not just do this with a view to these levels holding.

You also need to buy or sell breakouts of new market highs or lows. It’s a fact that most markets develop their best trends from these highs and lows and you need to learn to go with them and enter the market.

It may look like your getting in at good levels and its tempting to wait for the pullback – but these moves tend to not pull back and accelerate and offer the biggest profit potential.

The market price is the right place and if you cut out prediction and trade the reality, you can have the basis of a forex trading strategy that can make big consistent profits.