There are many profitable forex trading strategies that can make you a successful trader. Understanding the strategy that suits your personality and psychology is crucial. In the following section, we will let you know What is the Most Profitable Forex Trading Strategy?
A profitable forex trading strategy is a system that a foreign exchange trader uses to identify the right price and time to buy or sell a forex pair. There are many forex strategies in the world like technical analysis or fundamental analysis. The most profitable forex trading strategy should allow traders to execute trades with good trade management techniques.
Forex trading strategies require several factors to create a profitable strategy. There are many forex trading strategies in the world that a trader can follow. However, identifying the most profitable forex trading strategy is important. Every new and experienced trader has his unique trading goals and mindset that needs to be considered when selecting the most profitable forex trading strategy.
It is often impossible to identify the most profitable forex trading strategy as it depends on the traders’ personality. One strategy might be good for a trader that might not work for another. Therefore, profit relies on how traders are implementing the strategy in his trading chart and how a trader is managing his trade.
Most Profitable Forex Trading Strategy
We did extensive research from many trading strategies in the world. However, all strategies are the best for anyone. Some strategies require a level of investment that a retail trader cannot afford. Therefore, retail traders should use a trading strategy that reflects institutional traders’ activity. The retail traders' impact is very small in the Forex market compared to institutional traders. Therefore, the only way to make a profit for a retail trader is to follow the footprints of big boys.
In the following section, we will discuss the 5 most profitable Forex trading strategies. Now it is your duty to identify the right one. You need to know about most of the strategies to pick the profitable one for you.
- Forex Scalping Strategy
- Candlestick Based Strategy
- Support & Resistance Based Trading Strategy
- Trend Trading Strategy
- Fibonacci Trading Strategy
Let's have a look in detail.
#1 Forex Scalping Trading Strategy
Scalping is a beneficial technique, particularly where newbie traders have involved it as a low-risk method. However, traders with a strong mindset have the capability to make attractive earnings from this approach. Scalping is basically a trading style that makes a profit on small price movements when the price has emerged as profitable. Scalping reaches consequences with the aid of growing the variety of numbers of losing and winning trades.
It is very usual for a Forex trader to make an income on an extended time-frame to achieve tremendous outcomes. On the other hand, it isn't always easy to make profit from a scalping trading strategy. This method needs a lot of practice and dedication to ensure consistency. Additionally, there are numerous scalping strategies that work nicely from the 1-minute chart to one hourly chart. Traders can take advantage of 10 pips to 100 pips may be considered to be a scalping strategy.
However, scalpers have a better ratio of triumphing compared to the winning trades. Additionally, scalping requires traders to follow a strict exit method to avoid big losses that may get rid of the numerous small gains. Overall, scalping calls for a wonderful quantity of endurance but it could be distinctly effective.
Is Scalping profitable?
If you are a full-time trader and you are in the field for more than a year this trading method might be profitable for you. However, it depends on how you are implementing the trading rules.
#2 Candlestick Based Trading Strategy
Candlesticks are very common currency chart types which can be utilized by Forex traders. There are different forms of charts besides the candlestick chart like line charts and bar charts. However, they don't reflect much about past movement. The candlestick chart supplies most accurate price movements based on technical analysis methods. So, a trader can make trades based on the reaction of price within the past.
Candlesticks are available from 1 minute to every week or a month. This is a completely useful tool for indicating opportunities for buying and selling positions and exits. There are a lot of traders’ who choose this system. This system works perfectly throughout times of volatility or non-volatile instances if trades use one or extra other indicators alongside support and resistance within the chart.
Additionally, some candle formations with a combination of 2 or 3 candles work as a reversal price signal like two bars, pinbars or engulfing. Moreover, there are also many chart patterns like, flag pattern, bat pattern head and shoulder, which might be formed with several candlesticks inside the chart to point an exact buying and selling position.
#3 Support & Resistance Based Trading Strategy
It is very easy to find out how to spot the support and resistance level on the charts. Support and resistance levels are boundaries, which is clean to spot on charge charts, as they save you the price to move from a level. Moreover, S&R works nicely in all levels of time frame. This strategy is considered one of the powerful ways to effectively predict the future path of a selected currency pair. Many famous foreign exchange traders, Hedge funds, Banks often use the level to predict the future price direction.
Besides, indicating the proper trading entries, it also can highlight the price to take an entry. Therefore, these levels create a road map to the price chart that signifies the capacity of potential price reversal factor. Having the capability to expect future price movement is a powerful tool that a trader should know using easy chart analysis.
What are the Conditions for support and resistance ?
- Understand the overall market context to understand the big picture.
- Only take sell entries from the resistance area.
- Take buy entries from the support area only.
- Do not take counter trades against a strong trend.
#4 Trend Trading Strategy
The idea of the trend trading approach is to follow trends behind it's far selecting a top or a bottom. This trading strategy involves figuring out the currency pairs which might be trending both bullish or bearish to take the positions. For a bullish structure, any buy entries will work properly than any selling trades.
The subsequent step is to find trading entries by using an indicator. There are several trading indicators that are to be had within the trading chart. You just have to find an appropriate one. There are numerous custom indicators to be had and you can make your personal indicator as nicely.
For example, RSI is a popular trend indicator that moves from 0 to 100. The indicator levels point to the strength of the movement of a currency pair. If the RSI is above 70 levels it is a potential selling opportunity and below 30 is a buying possibility.
#5 Fibonacci Based Trading Strategy
It is one of the most profitable forex trading methods. This trading system takes into consideration as a medium or long term method. As It used to follow important areas it requires higher time frames in the chart. As we know, the market follows the Fibonacci nicely whilst the marketplace is trending.
The basic concept behind his method is to take buy and bearish entries on a fibo retracement level. When the price moves in the Fibo patterns, traders may find support levels at 0.328, 0.50 or 0.618 retracement levels. The Fibonacci trading method is used by many traders along with institutional traders. However, it needs to be stated that this system needs much practice to grab.
There are many trading strategies and a trader should pick the most profitable one from these. As we know, forex trading involves a risk of trial and error so you should practice several strategies to identify the most profitable one for you.
The scalping strategy requires a lot of time in the chart, which is not suitable for part-time traders. The most profitable trading strategy relies on how you are implementing it on your chart.