The disadvantages of the strategy are rare signals, although the percentage of profit is quite high. And you can launch the strategy trading multiple currency pairs. This strategy has an interesting modification based on similar logic. Investors, day traders, working with a trading volume prefer intraday strategies.
They do not have enough money to make a strong influence on the market. So, if there is a strong market action in the weekly chart, this signal the pressure made by big traders. Differently put, if there are three weekly candlesticks in the same direction, the fourth candlestick should be in this direction too.
The psychological factor is also important here. Those, who have been pushing the market in one direction, should start taking the profit in a month. It is good if the next following candlestick is bigger than the previous one. Doji candlesticks candlesticks without bodies are not taken into account. A stop loss is set at the close level of the first candlestick in the sequence. It can take 2 or 3 months. But if you launch the strategy on multiple currency pairs, this term of expectation is justified.
Take swaps into account! The strategy is referred to as a universal one, and it is often recommended as the best Forex strategy for consistent profits. This is a trend strategy. Most sources suggest using it in different timeframes, including minute ones, but market noise lowers its efficiency in very short timeframes. EMA with periods 5, 25, and Apply to — close closing prices. You can enter the trade at the same candlestick when the moving averages have crossed.
A stop loss is set close to the local low, take profit is points. But if you manage trades manually, you can make a bigger profit. It indicates a change in the slope from a rise to a flat. It is clear from this screenshot that all the three signals two longs and one short yielded profit.
One could have entered the trade at the next candlestick. It is after the signal one to be sure in the trend direction. However, a good entry point would have been missed. It is up to you whether to risk or not. These parameters will hardly work for hourly timeframes. Well, you are familiar with the theory now. I want to briefly describe how to launch these strategies in real trading.
Step 1. Open a demo account. It is free, you do not have to top up the deposit. On the website home page, there is the Registration button. Click on it and follow the instructions. You can also open an account in other menus. For example, in the upper menu, trading conditions for an account, and so on. Step 2. Study the functions of the trader profile. It has a user-friendly, intuitive interface.
You need to study the instruments on the platform and find out how to make a trade. The trader profile is described in this overview. Step 3. Open trading platform. LiteFinance provides detailed descriptions of dozens of indicators and strategies. There are also the answers to your questions and the recommendations of professional traders.
LiteFinance includes a professional trader blog , analytics, and a complex educational block. It provides all the necessary tools to develop your skills from a beginner to a professional. LiteFinance allows getting many pleasant bonuses and prizes, from the brand new gadgets to a car or even a dream house!
You can learn more about the promotion here. Try yourself! All you need is to just open a demo account via this link. Follow the instruction, and observe the recommendations offered in this article. Believe in yourself and do not be afraid of experiments! And finally, let us see what features a profitable trading strategy has. What characteristics shout it have? I can define the three most important features of the effective trading strategy:.
Minimum lagging indicators. The less is lagging, the more accurate is the forecast. Forex trading strategies that work must not have lagging indicators. It is very important to understand the main principles of your trading strategy. It is better to be an expert on the simple strategy than to use complex strategies.
It is very important to understand your forex trading strategy. Special features. A strategy should be adjusted to your trading style and methods, your personality, special circumstances, and so on. It is very important to develop your trading strategy. However, first, you need to try many other strategies that have been developed and tested.
In the Forex blog, you will find many working forex strategies that you can download for free. Before you launch a trading strategy, test the strategy on a demo account in the MetaTrader terminal. To be a successful Forex trader, you should develop your own best profitable trading strategy. Get familiar with the latest Forex trading strategies, develop and improve your trading plan.
Following this simple instruction will allow you to be satisfied with your trading performance. Here are three simple and very effective Forex trading strategies. Read more here. Forex strategy is a special technique or trading technique traders use to determine whether they should buy or sell a currency pair at a given time. Strategies based on technical analysis require the use of indicators, while strategies based on fundamental analysis require business data and economic news.
Here is a library of Forex trading strategies with detailed examples of use. Did you like my article? Ask me questions and comment below. I'll be glad to answer your questions and give necessary explanations. Home Blog Beginners Most profitable Forex trading strategies. FAQs What is the best Forex trading strategy? What are strategies in forex trading?
Rate this article:. Need to ask the author a question? Please, use the Comments section below. Start Trading Cannot read us every day? Get the most popular posts to your email. Full name. Written by. Jana Kane Editor-in-chief and the project manager of LiteFinance traders' blog. Forex hedging is directly related to risk management. While a moving average is used to help determine the trend, MACD histogram , which helps us gauge momentum, is used as a second indicator. This strategy waits for a reversal trade but only takes advantage of the setup when momentum supports the reversal enough to create a larger extension burst.
The position is exited in two separate segments; the first half helps us lock in gains and ensures that we never turn a winner into a loser and the second half lets us attempt to catch what could become a very large move with no risk because the stop has already been moved to breakeven. Here's how it works:. Although there were a few instances of the price attempting to move above the period EMA between p.
We waited for the MACD histogram to cross the zero line, and when it did, the trade was triggered at 1. We enter at 1. Our first target was 1. It was triggered approximately two and a half hours later. We exit half of the position and trail the remaining half by the period EMA minus 15 pips.
The second half is eventually closed at 1. ET for a total profit on the trade of The math is a bit more complicated on this one. The stop is at the EMA minus 20 pips or The first target is entry plus the amount risked, or It gets triggered five minutes later. The second half is eventually closed at ET for a total average profit on the trade of 35 pips. Although the profit was not as attractive as the first trade, the chart shows a clean and smooth move that indicates that price action conformed well to our rules.
We see the price cross below the period EMA, but the MACD histogram is still positive, so we wait for it to cross below the zero line 25 minutes later. Our trade is then triggered at 0. As a result, we enter at 0. Our stop is the EMA plus 20 pips. At the time, the EMA was at 0. Our first target is the entry price minus the amount risked or 0.
The target is hit two hours later, and the stop on the second half is moved to breakeven. We then proceed to trail the second half of the position by the period EMA plus 15 pips. The second half is then closed at 0. In the chart below, the price crosses below the period EMA and we wait for 10 minutes for the MACD histogram to move into negative territory, thereby triggering our entry order at 1.
Based on the rules above, as soon as the trade is triggered, we put our stop at the EMA plus 20 pips or 1. Our first target is the entry price minus the amount risked, or 1. It gets triggered shortly thereafter. The second half of the position is eventually closed at 1. Coincidentally enough, the trade was also closed at the exact moment when the MACD histogram flipped into positive territory. As you can see, the five-minute momo trade is an extremely powerful strategy to capture momentum-based reversal moves.
However, it does not always work, and it is important to explore an example of where it fails and to understand why this happens. As seen above, the price crosses below the period EMA, and we wait for 20 minutes for the MACD histogram to move into negative territory, putting our entry order at 1. We place our stop at the EMA plus 20 pips or 1. Our first target is the entry price minus the amount risked or 1. The price trades down to a low of 1.
It then proceeds to reverse course, eventually hitting our stop, causing a total trade loss of 30 pips. Using a broker that offers charting platforms with the ability to automate entries, exits, stop-loss orders , and trailing stops is helpful when using strategies based on technical indicators. When trading the five-minute momo strategy, the most important thing to be wary of is trading ranges that are too tight or too wide. In quiet trading hours, where the price simply fluctuates around the EMA, MACD histogram may flip back and forth, causing many false signals.
Alternatively, if this strategy is implemented in a currency pair with a trading range that is too wide, the stop might be hit before the target is triggered.
Keep and the idea of a big picture always in mind, even while considering a short position. Test your trading strategies on AvaTrade. Fundamental analysis tools are the ones built upon main market mechanisms: supply and demand forces. Forex analysts basing their analyses on fundamental tools claim that prices are formed improperly at first. Only later the financial instrument is valued according to its real price. Unlike technical analysis, fundamental tools do not involve price log reasoning.
However, it still has common indicators with technical analysis, like support and resistance levels or trend following. Naturally, it does not rely on these indicators in the same way or on the same scale. In general, trading is more about technical analysis than a fundamental one. Technical analysis is of much more use and information provided, comparing to the fundamental one. The last one serves a supporting role and dominates as a tool only in some extraordinary strategies.
It is impossible to create a profitable Forex system, basing only on fundamental tools. Fundamental analysis gained huge recognition on the stock exchange market a long time before someone came up with an idea of price charts analysis and price models building. Of course, there is a huge difference between currency and stock exchange markets. And this is where the problem lies. The correlation in the stock exchange market is obvious: if the firm is doing well, its stocks prices increase while decreasing in the moments of downs or company crisis.
The order of things is much more complicated in the case of the currency exchange market. The same applies to other welfare signals. Let us present a couple of examples. Imagine a central bank decreasing interest rates as a response to a governmental decree issued. As an effect, the price of the currency decreases, stimulating export.
The economy improves, though, its currency is getting weaker. Another example represents an economic situation when the interest rate is near zero points. In such a case, the central bank implements an aggressive monetary policy and injects a huge amount of money into a turnover in order to slow down inflation.
Consequently, due to speculations on the market, most of the money ends up offshore, which leads to deflation, and currency strengthen. From the examples above, we can easily see that currency value is not that easy to define. It makes fundamental tools unreliable and impossible for traders to base on them fully. Fundamental analysis is considered as an additional review of the market situation. Only together with technical analysis being a basis do they create a most profitable Forex system.
Fundamental ideas supporters, however, created some interesting and unusual concepts, used in many strategies, which became the most profitable FX systems. We describe a couple of them below. Let us consider a trader, who is untiringly following financial news releases.
He is acting also in accordance with the announced events. As a result, we get seldom transactions on a well-balanced account. The potential of such a trader on a Forex market is huge, especially, if he is an experienced one. This scheme is mostly based on tracking the news and drawing conclusions from macroeconomic theory, which is a fundamental tool.
Now, imagine a trader, having low-yield investments. He is trading on such currency pairs, where one currency has low interest rates and the opposite has high interest rates. These conditions make the swap positive, allowing earning more in long term, provided that you are patient and feel comfortable with deploying your funds for a long time.
This is another example of making money using fundamental tools. Transparent pricing, reliable, fast executions and tight spreads. One of the approaches, used widely by fundamentalists on the stock market can find its application on the foreign exchange market, making it one of the most profitable Forex systems. If supply and demand is the main driving force of the market, then it must be a considerable player, who is dictating the course of the market.
There could be bullish and bearish market sentiments, depending on the route of the price. Due to particular features of the stock exchange and Forex markets , while using the same tools we have to use different approaches. While in the currency market, it is impossible to track the number of open traders or the trading volume, mainly because of its over-the-counter market nature.
Therefore, there was a report created, called the Commitment of Traders report. It allows traders to determine the market sentiment, measuring the net amount of open positions. Following the pieces of advice given, you would not define entry or exit points but would be able to discover the mood of the market. You can easily improve the strategies described, using elements of technical analysis, following the trend of catching the waves. We cannot tell you, what is the best trading strategy, as it is an extremely personal issue.
Aggressive traders cannot deposit money and wait for a couple of months for a return on their investments, while careful traders will not be able to make daily minute transactions. Moreover, there are many profitable schemes and strategies, and tips for Forex trading and it will definitely take you some time to find yours.
Many beginning traders take a strategy and modify it or create a new one from scratch, or do both. In any case, you have to understand the strategy fully as well as the tools applied. Figuring out your own approach and creating your strategy is an art. You have to use different tools and settings, try different currency pairs and time frames before you find the most profitable for you.
It is not about the profitability of a strategy, it is always about the profitability of a trader. To put it in a few words, scalping is a method that focuses on benefitting from small price movements and reselling for a quick profit. A lot of traders claim that with that technique, it is possible to generate large volumes from very tiny profits. If you wish to make a consistent income and make your Forex trading profitable, you might need to follow the following steps — It is the best idea to choose and test a consistent trading strategy and set realistic profit targets.
Additionally, if you wish to have profits, you should avoid using high leverage as they come with a high risk of losing all your funds. Gerard contributes his 10 years of experience to the Forex Trading Bonus team by reviewing different brokers, outlining regulation, and reporting on the most important news in the industry.
His brief stint in the Bank of England gives him the edge over many other writers to deeply analyze a policy change and come up with a distinct result that could come from it. Be the first one to find out about available Forex trading bonuses that can be trusted.
Sweet, right? Grab it now. Check our help guide for more info. Traders Tips. Building Your Own Best Forex System Exploring the rich variety of different tools and methods available on Forex, a trader discovers the huge field for creativity.
Price charts The price charts are presented in a time-price table, wherein most of the cases the price changes are reflected in form of Japanese candles. Most Profitable Forex Analysis Techniques One of the foundations of the price analysis theory is that prices have their own special points, where they change the direction or, vice versa, strengthen and consolidate.
Trends are Good Tastes differ. Test your trading strategies on AvaTrade Fundamental Analysis Tools Fundamental analysis tools are the ones built upon main market mechanisms: supply and demand forces. Profitable Forex Tools Fundamental analysis gained huge recognition on the stock exchange market a long time before someone came up with an idea of price charts analysis and price models building.
What is the most successful Forex strategy? How can Forex trading be consistently profitable? Comments 6 comment s Click here to cancel reply. Leave a comment. Subscribe to receive updates about FX bonuses Be the first one to find out about available Forex trading bonuses that can be trusted Get on the list. In the foundations of price action trading lies an observation that the market often revisits price levels, where it previously reversed or consolidated — this introduces the concept of support and resistance levels into trading.
Did you know that Admiral Markets offers an enhanced version of Metatrader that boosts trading capabilities? Now you can trade with MetaTrader 4 and MetaTrader 5 with an advanced version of MetaTrader that offers excellent additional features such as the correlation matrix, which enables you to view and contrast various currency pairs in real-time, or the mini trader widget - which allows you to buy or sell via a small window while you continue with everything else you need to do.
Support and resistance levels are less of a line defined strictly to a pip , and more of an area that can range from a couple, to a couple of dozens of pips in width, depending on the time frame you are looking at.
When a breakout occurs and it is confirmed by a candle closing reasonably beyond a level — this serves as a signal that the market has the momentum to move further in the direction of a breakout. Remember that as the same chart may appear to consist of different patterns to different traders, it may also produce opposing signals, pointing towards the imperfections of the method.
As for Fibonacci, techniques that include data from outside the market, like Retracement traders use Elliott wave theory as a basis that suggests the market moves in waves. After a significant move comes a smaller one, in the form of a pullback or retracement, as the price of an asset adjusts to its true trend. Anybody who has ever seen a chart will have noticed something similar. However, claiming that Fibonacci ratios accurately predict the swings is very brave at least.
As a beginner trader who is interested in looking for chart patterns, remember that the human brain is highly suggestive, and is wired to see regularity even in the most random data. Just because the brain sees it, it doesn't mean it is really there. The pinnacle of technical trading is a combination of two more Dow postulates — the market trends, and it trends until definitive signals prove otherwise.
A trend is a market condition of the price action moving in one evident direction for a prolonged period of time, and if there's one thing all traders agree upon, it is that the trend is your friend. Financial traders are great fans of trend measuring and trend following, and they have a variety of technical indicators to support their strategies. Most of the indicators available on your trading platform , from moving averages , to the classic MACD and Stochastic , to the more exotic Ichimoku are all designed to point out whether there is a trend, and if there is, how strong it is.
Such traders always buy when the market is going up, and sell when the market is going down. They usually miss the beginning of a trend, and are never trading at the tops and bottoms, because their systems require confirmation that the new swing has in fact resulted in the development of a new trend, rather than being just a pullback within the old trend. What neither trend following traders, nor their strategies like is ranging markets.
A ranging market is like a horizontal trend, with the price action bouncing up and down within a confined corridor. There seems to be neither a bullish nor bearish trend at those times, and everybody sits tight until a breakout occurs, and a new trend develops and proves its legitimacy.
Trend following strategies, when followed correctly of course, are the safest and arguably the most profitable trading strategies out there. They perform best when used over the long-term, as trends take weeks and months to develop, and may potentially last for years or even decades.
If you're aiming to be a trend following trader you need to be patient, and make sure you have a lot of risk capital at your disposal. Even if you are not aiming to be a technical trader, or a long term-trader, the concept of markets trending should be incorporated into your trading system, and if not as a primary action tool, then at least as an underlying market principle.
Knowing which way the market is going in the long run never hurts, which is why even 15 minute intraday traders always check the bigger time frames before opening trades. Click the banner below to open your live account today! Fundamental analysis , as opposed to technical analysis, focuses on the fundamental forces influencing supply and demand, as the primary price moving vehicles.
Fundamental analysts claim that markets may misprice a financial instrument in the short run, yet always come to the 'correct' price eventually. Despite fundamental analysis having close to nothing to do with the price action, it overlaps in a few areas with technical analysis. For example, both recognise the concept of the trend, and the importance of the key levels, albeit for different reasons. All in all, it is worth mentioning that the Forex market is mostly a domain of technical analysis, with fundamentals used as supporting indicators, or as a base only for a few extravagant strategies.
Fundamental analysis was born in the stock market in the times when barely anybody on Wall Street even bothered laying price action on charts. Since there are no company balance sheets and income statements to analyse in Forex, currency traders focus on the overall conditions of an economy behind the currency they are interested in.
The only problem is that even though countries are much like companies, currencies are not quite like stocks. A company's financial health is directly reflected in its stock price. Both improving and declining performance can be identified by fundamental analysts, which would help to predict how stocks should behave.
For countries, however, an improving economic performance does not necessarily equal growth in its currency's relative value. A central bank responds to a directive by the government and decreases interest rates to weaken the currency, thus making domestically produced goods relatively cheaper and stimulating exports. The economy improves, although the currency weakens. Next is quantitative easing.
When the interest rates are near or at the zero point, a central bank implements an aggressive monetary policy, aimed at injecting large quantities of money into a national economy, in the hope of improving the inflation, thus weakening the currency as a byproduct. In practice, however, it might lead to an increased outflow of the national currency offshore, through speculation on the markets, leading to deflation. A currency's relative value turns out to be a function of a great multitude of factors from national monetary policies, to economic indicators, to the world's technological advancements, to international developments, and to so-called 'acts of god' that nobody could possibly see coming.
For most traders, fundamentals forever remain the go-figure type of indicator — never reliable enough on its own to ever claim to be the most profitable Forex system. That being said, the ingenuity of fundamentalists means they have developed a few interesting strategies worth researching for ideas. For example, news scalping is technically a fundamental based strategy, since a trader tracks down news releases and acts upon them. Another example are carry trade strategies.
These are long-term, low yield investments that work on currency pairs with the base currency having high interest rates, and the counter currency possessing low interest rates. This results in positive swaps that can accumulate through time to significant amounts.
Please note that this style may require the deployment of your funds for long periods of time. If you are considering in investing in the stock market to build your portfolio with the best shares for , you need to have access to the best products available. One such product is Invest. MT5 enables you to invest in stocks and ETFs across 15 of the world's largest stock exchanges with the MetaTrader 5 trading platform.
Other benefits include free real-time market data, premium market updates, zero account maintenance fee, low transaction commissions, and dividend payouts. There is one particular market approach available to fundamentalists that comes directly from the stock market.
Its logic is this — if supply and demand is what moves the market, then it is the big player tapping the bases of the scales that moves supply and demand. Whether the market is bullish or bearish depends on the investment mood of the big players, and this is known as the market sentiment. This concept is shared by all financial markets, including Forex. In stock, if the volumes are rising while the open interest the amount of trades that remain open is dropping, chances are that the market sentiment is changing, and soon so will its direction.
Since the Forex market is traded 'over-the-counter', tracking the trading volume or measuring open interest is impossible in the way that it is performed on the stock market. The next best thing to help traders gauge market sentiment is the 'Commitments of Traders' report for the Forex futures market.
The CoT measures the net long and short positions taken by both speculative and investment traders — the market sentiment, basically — and is published weekly by the US Commodity Futures Trading Commission. Following the CoT provides no precise points for entries or exits, but it does provide an idea of the mood of the market.
To be specific, this method may be upgraded with methods of technical analysis, and then eventually turned into a potentially profitable long-term Forex system, that not only follows the trend, but also catches the swings. There are many profitable Forex trading systems. Determining which one is the most profitable is impossible, as it really depends on individual preferences.
How profitable a Forex system is depends on a variety of factors, starting with the trader, and ending with the market. Trending strategies perform poorly in ranging markets, and long-term strategies fail on short time frames.
Aggressive traders can't afford to wait for a month, while careful traders are unwilling to risk their money with day trading. Using various tools, a trader is free to create their own strategy or customise an existing one, or both, having several strategies ready to be applied at their whim. Either way, a deep understanding of how a strategy works is always required, as well as the discipline to follow it.
We introduce people to the world of currency trading, and provide educational content to help them learn how to become profitable traders. We're also a. Three most profitable Forex trading strategies · 1. Scalping strategy “Bali” · 2. Candlestick strategy “Fight the tiger” · 3. “Profit Parabolic”. TOP 3 most profitable forex strategies · Scalping strategy "Bali" · Candlestick strategy “All-bank” · “Parabolic profit” based on the moving average.