There are about as many forex trading strategies as cars on the road. As discussed under analyzing the best trading system, these rules apply for a good trading strategy.
The maths behind the strategy needs to be in your favor. ie win/loss
ratio (accuracy), win/loss size ratio (amount won vs amount lost) and
also provide sufficient opportunities to trade it.(Number of trades in a
given time period).
In other words the systems profit target needs to be greater than
its stop loss on each trade assuming it has a 50% accuracy. If it's
accuracy is extremely high like 90%, then we can even have it's stop
loss levels larger than its profit targets.
If the systems accuracy is low, like say 40% correct, it will
mean that the system needs to have a higher win/loss size ratio. (ie
Larger profit target vs stop loss amount).
Different system ratio's can still produce good results as long
as they all work together. Its all a matter of finding the best
combination of accuracy, win/loss size and trade frequency.
For a detailed discussion on maths behind the best trading system visit here.
The trading method also needs the correct money management. For more information on the importance of money management go here.
The strategy also has to fit your available time to trade and your personality. See the importance of psychology read more.
Remember for a strategy to be extremely successful we need all
those three essentials to be correct. 1.Maths behind the strategy 2.
Correct position sizing (money management) and 3.Be in control of our
emotions such as fear and greed. (Psychology).
Experts agree to keep the strategy simple
Most trading experts agree that a good trading strategy should
not be overly complicated. As a general rule they say the use of up to
four indicators or triggers are about the most you will require to trade
with a high degree of success.
To test different trading strategy idea's, there is software specifically created for that purpose. Read more here.
When you find some recommended trading strategies, just test them
out on the simulators first and see how they perform. Usually you will
find that you can combine some good strategy idea's and in effect build
your very own system.
Where can you get some forex trading strategy idea's?
You can always purchase a successful strategy from someone whom
has a proven track record. For example take a look at recommended
Free forex strategies
Brainyforex has compiled a list of free trading systems here.
Another excellent place to find different strategies and idea's is Edward Revy's "Forex-Strategies-Revealed.com";
Visit Edward Revy's site,
Edward's site has a HUGE selection of trading strategies;
You are welcome to forward a strategy to
forex-strategies-revealed.com that you are working on so as to receive
free assistance and feedback for improvement. Or learn from those
developing these new strategies.
Forex traders using Metatrader 4 can find excellent information about using indicators and strategies at www.forextradingmt4.com
Larry's Williams website is also a good source of (free) educational strategy content. For those whom have not heard of Larry, he has over 50 years of trading experience. His site is www.ireallytrade.com
Larry trades the Futures Market. His trading strategy involves
following natural and seasonal cycles, Commitment of Traders Data
(trading on the side of the commercials), identifying a low-risk price
setup for entry and then staying in the market between 6 and 35 days
along with using a trailing stop loss.
Having been a subscriber to Larry's free offerings, it is evident
that he uses some of WD Gann's trading methodologies. Apart from his
market cycle work, he also looks for specific turn dates that can only
be predicted based upon prior price history. Larry tries to figure out
in advance "date specific" turn dates which he offers in his paid
Having seen some of his past forecasts (provided to free
subscribers) his cycle work still needs some refining which Larry would
have no problem admitting. Some of his predicted turn dates have worked
out, while others have not. (PS : Isn't that normal for all market
It is also interesting to see that Larry also first considers the
"WEEKLY CHART" to look for a trade setup before looking at the daily
chart. Once again, WD Gann said that WEEKLY CHARTS are the best to work
An interesting radio interview between Michael Covel and Larry is available on the trend following radio network.
More Forex Trading Strategies
There is also a growing collection of forex trading strategies here at brainyforex. At the free trading strategy section, free trading systems.
Forex Day Trading
Advantages Of Forex Day Trading, click here
Swing Trading Currencies
For a look at a swing trade strategy, click here
Scalping the forex markets with different forex trading strategies
How do you scalp the market for profits? What is scalping? Find out how it works here