Top 20 Best Forex Trading Strategies that Work
This is a continuation of our Top 10 Best Forex Trading Strategies that Work that we had previously posted. The strategies posted here works but unfortunately most of the time, traders don’t work or implement to plan. Do understand that there is no such thing as a perfect system that just never fails…
You will also be provided with the best Forex trading strategies that actually work and are suitable for different type of market environments. Now, the number one reason why there is no Holy Grail in trading is because there is no strategy to be profitable in every type of trading environment. The markets keep on changing which is the only certainty we have in Forex trading.
As a trader, you have to be prepared to face all types of market conditions and you need to be equipped with the “right” strategy for the “right” market environment. You have to accept that the trading conditions are changing and your Forex strategy needs to cope with that and so do you as a trader because what happened back in the early part of this year, the market conditions are different now. Having a strategy that suits your personality and you understand the logic behind it, is the first step towards Forex trading profitability.
The Nicolas Darvas Trading System is a short-term trading strategy designed for the 15-minute chart however, due to the fact that the markets are fractal in nature, the same principles can be applied to higher time frames as well. Nicolas Darvas found out that once a defined bullish or bearish trend has developed the trend will continue to move in “boxes”. A “box” is defined by the price oscillating “fairly consistently between a low and a high point.”
While the Nicolas Darvas Trading System relies mostly on the price action the system also uses one technical indicator: the 20-day moving averages. The 20-day moving average it’s used to determine the general market trend and to ensure trades are open only in the direction of the predominant trend. The system is straightforward you only buy the upside breakout of the Darvas box if this form above the 20-day MA and vice-versa for selling.
The 4 Hour RSI Bollinger Bands Strategy is a good Forex strategy if you do not want to be glued in front of your computer all day long. This is a non-directional strategy that generates sell and buys signals for the 4-hour time frame. The Bollinger Bands indicator is used to determine when the price range will start narrowing while the RSI indicator will determine in what direction the market will break out of the range. This kind of trading setup will often produce explosive price movements.
The strength of this strategy is that it’s trying to anticipate the breakout direction and most of the time you will be in a trade before the actual break to happen which is good because it increases your profit margins.
Elliott Wave analysis involves a lot of subjectivity, but the Elliott Wave Theory with Fibonacci Retracement Levels is a strategy that uses a technical indicator that will automatically plot the Elliott Wave count on your chart. The Fibonacci levels uses particular scientific data points to determine specific support and resistance levels which means that we’re dealing with a completely systematic trading system. The trade signals of the system are very easy to follow as once the MT4 Elliott Wave indicator plots a 5-wave sequence normally we would expect at least a 3-wave pullback as per Elliott Wave theory thus we buy/sell to catch a retracement to at least the 50% Fibonacci level into the prevailing trend.
The RSI Stochastic Divergence Strategy is a trend following a strategy that uses multiple technical indicators to spot the best possible trading opportunities. The Stochastic indicator is used to spot hidden divergence which is a more powerful tool than the classic divergence and it can give us an edge. The trend direction is determined by using the 20 and 50 moving average crossover system. For extra confirmation, the RSI indicator is used and the trade will only be entered when the RSI crosses above/below the 50 line. This strategy can be applied anywhere from the 1h time frame up to the Daily time frame.
News trading can be a very lucrative business if you’re on the right side of the market due to the sudden rise in volatility around news releases. The Forex News Trading Strategy offers you a unique approach to trading risk events. This is an unconventional news trading strategy because it looks for a divergence between what the actual news data suggests and what our technical indicators tell us. If the fundamental data suggest that a currency pair should raise but our indicators tell the currency pair should fall, only then a trade signal is triggered.
For example, the general consensus around Brexit was that the UK leaving the EU is a low probability event so clearly the risk was to the downside. However, the stochastic indicator was pointing for a sell signal as it was in extreme overbought condition and this divergence between the Brexit consensus and the stochastic indicator is the trigger for a short trade.
The Bollinger Bands and Stochastic Strategy is a reversion to the mean strategy that can provide us with trade setups where the risk is small versus the potential gains. While the Bollinger Bands is used to measure the standard deviation which is a measurement of volatility the stochastic indicator is used to determine potential overbought and oversold price points from where the market can reverse. The preferred time frame for the Bollinger Bands and Stochastic Strategy is the 5-minute chart which makes it a great scalping strategy.
The 5 min Forex Scalping Strategy with Parabolic SAR and MACD is another scalping strategy that can be used by part-time traders as well as full-time traders. The Parabolic SAR indicator is not just a momentum indicator, but it can be used to determine trends especially short-term trends. The main objective of the strategy is to trade in the direction of the 5-minute trend by entering on the first pullback. The MACD indicator is used as a confirmation signal.
The Renko Charts Trading Strategy is based on the Renko charts, which is an unorthodox type to plot the price action because it doesn’t factor in the time element. One of the most commonly used trading approaches of trading with Renko charts is trend trading because the price trends that are visually easy to identify with Renko charts which is why it fits best into a trend trading environment. In order to better time the market the Renko Charts Trading Strategy uses the Ichimoku indicator as well which can offer us some killer setups.
The 1 Minute Forex Scalping Strategy with CCI and Slope Indicator is a trading strategy that requires a high level of discipline and the ability to process information very quickly. The TMA Slope MT4 indicator is a proprietary technical indicator used to determine the price momentum. The 1-Minute scalping strategy will give you the precision you need to trade when dealing with a faster time frame such as the 1-minute TF. This strategy is very easy to follow; a buy trade is triggered once the CCI turns green and CCI drops below -100, and a sell trade is triggered once the CCI turns red and CCI is above +100.
The Ichimoku and MACD Momentum Strategy is a trend following strategy that suits best for the swing trader. The system works very well in a trending environment while in a ranging market it tends to produce a lot of false entry signals which is one of the reasons why we’re only going to use this strategy when we have a clear trend in place. In summary, we’re going to use the Ichimoku Cloud features to identify the trend and potential support/resistance that can be a good level to entry the market, but in order to fine tune our entry and reduce the amount of false signals, we’re going to sue the MACD indicator as well.
Choosing the right strategy, it completely and totally depends on the trader’s personality. The fact of the matter is there is no right or wrong answer when it comes to choosing a strategy or building a strategy that is unique to you. You need to build and trade a strategy around your personality and don’t try to change your personality for a strategy because that almost never works and you’ll continue to struggle throughout your trading career. If you like these Top 20 Forex Trading Strategies, be sure to check out our previous 10 Top Forex Trading Strategies here…
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