Seeking for the holy grail
By Guy Avtalyon
The trading strategies that actually work? How to choose? Where to find? Okay, I understand your dilemma. You would like to be successful and you want to know, what strategy should you choose to nail it.
Listen here! First, let’s make clear what the Trading Strategy is
A trading strategy is a set of trading settings that serve the currency trader to determine whether to buy or sell a currency, where to enter and exit the position, and how much capital they invest in trade, and in doing so, earn a difference in price.
Question everything, it is a vital part of your trading.
A forex broker can offer you the opportunity to enter into trades that are multiple times the value of the margin that you place.
The market is fluid and you can open a trade or exit from one very quickly, so there is potential to make considerable returns.
To complicated? Wait!!! There is more!
Trading strategies can be – automated (various robots for trading, etc.) – manual (the vast majority of traders use their own trading system.)
The trading strategies that actually work
I would like to show you some of them which are successful. I will give you a brief description of 5 simple strategies that can help you to maximize your profits:
1) Swing trading is one of the trading strategies that actually work
You can have a profitable swing trade by timing your trade when there is a breakout after a period of consolidation.
What does this mean? A period of consolidation is said to occur when a currency pair moves in a well-defined price range. A breakout will occur. The values of the currencies will “breakout” a resistance level. If you predict the breakout precisely, you can profit from your trade.
A swing trade uses a channel trading strategy. Trades take place between the support and resistance levels of swing highs and swing lows.
2) Rangebound trading
Here you will need to identify a currency pair that trades within a certain range. Then, you have to identify the support and resistance levels and then time your trade by taking these movements into account.
It is likely that there will not be a big difference between the upper and lower prices of the range. Because of this reason, you could trade in one of two ways.
The first option is to trade within the range which will limit your profits as the price difference is bound to be minimal.
The second way is to look for a breakout from the range. If this happens, you will have to react quickly. You can make a quick profit, but you can lose out. A “false breakout” may cause the market to move in the opposite direction and lead to great losses.
3) Position trading
A position trade is not a short-term trade. It is based on macroeconomic trends. It could run over weeks or months or years. Traders take a long-term position based on an understanding of how inflation or the rate at which an economy is growing, will affect the value of a currency. If you want to adopt this strategy, you have to stay stick to two rules. First, do not use much leverage. A maximum of 10:1 is advisable. Secondly, the size should be relatively small. This is because you are taking a position with expecting a reasonably large movement in the relative price of the currency pair.
4) Carry trade
A carry trade means entering into a trade that will take advantage of the interest rate differential of the two currencies. That means you will be selling a currency with a low-interest rate and buying one that provides a greater rate of interest.
Normally, you would choose a currency pair where the higher interest rate currency will appreciate to the lower interest rate currency.
Carry trades can be high-risk. They are based on a combination of technical and fundamental analysis.
5) Momentum trading
Fun fact: “The prices usually tell lies, but momentum usually speaks the truth.”
At the simplest level, you can use momentum trading when rates are going up, then you should buy and when they are declining, you should sell and maximize your profits in the forex market. If you want to implement this strategy, you have to identify the currency pairs that show the greatest momentum and have moved most strongly. It is possible by tracking price movements over a period of several weeks. Then trade those pairs that show the greatest momentum.
How to find the trading strategies that actually work?
Let’s get back to the beginning and say few words about how important is for every trader to use a reliable and robust trading platform. You will need an Expert Advisor (EA). It allows you to conduct backtesting of your trading strategy before you commit your funds. You will need one that functions effectively on your smartphone and your tablet as well, a versatile platform that works well with Windows, Mac OS, and Linux.
The trading strategies that actually work 100% don’t exist. A system with 100% success does not exist so that you do not expect any of this system to win your earnings every time.
But with RRR (Required Rate Of Return) 1: 2 and following all the rules, you can only end up in the plus!
Wish you luck!!!