Forex Trading Strategies that Work and Myths to Avoid
You are here reading about the best Forex trading strategies that work because you have no idea why your strategies have not made you any money.
Well, this is the best time to enlighten yourself and possibly change your overall trading results.
We will be discussing the strategies and some mistakes that beginner Forex traders often make.
Forex trading strategies
(a)Support and resistance zones
Although support and resistance is a popular price action trading concept, very few traders are actually capable of making money with it.
The reason for this failure is that they often draw one or two lines representing support and resistance zones. Drawing these lines is less effective than observing the zones as a whole.
When you just draw out horizontal lines without putting much focus on the zones, you will either miss a lot of entry signals or get thrown out of the trade prematurely when volatility sets in.
However, if a trader works with zones instead, I believe that they can do a much greater job of filtering the ”noise” that exists in these areas, hence better results.
For better illustration of what we are talking about, take a look at the screenshots below.
(b)Not all Price Action Signals are worth Trading
When you see a price action signal, don’t just take the trade without first evaluating the surrounding market context.
This is a mistake that a lot of traders have been making and thereby losing money.
If you want price action signals that have the best odds of ending in the money, watch for price action signals that form at support/resistance zones.
In the above example, you can see a pin bar which had formed on a support zone. Since this was an uptrend, it would be worth buying this market considering that this is a valid entry signal that is in line with market context.
Pin bars make one of the best Forex trading strategies that work especially if you know how to utilize them in key areas of a chart.
Here is another pin bar setup that is worth taking. Notice that it formed at an area of resistance. There are two of them as marked by the blue arrows. If you entered a short position right after the close of the second pin bar, you’d have netted more than 100 pips in this trade.
(c)Best Forex trading strategies that work: Observe the following:
If you see long wicks, it only means that the market’s volatility and uncertainty is increasing.
You should avoid such markets at all cost. You only want to trade markets that are certain.
Either look for a trend or trade a clearly-defined market that is moving sideways. This is where you will need to watch price action signals that form on support or resistance zones like in the above two examples.
The size of the candle’s body
A candle that has a thicker body with a smaller wick signals strength from either buyers or sellers, depending on its color. On the other hand, candles that have a smaller body but longer wicks signal indecision.
Keep that in mind when considering to use the best Forex trading strategies that work.
Broker’s time and candlestick closing: do they influence price action trading?
This is a question that has been asked a lot. But in my opinion, broker’s time does not influence your trading in any way.
For some reasons, traders have been made to believe that those who trade price action signals on New York Close Forex charts have and edge over those who trade other charts. Now, this is complete BS.
Whether you use New York Close Forex charts or any other chart, it does not make any difference to your overall trading experience.
However, the time frame that you are using can make a whole lot of difference.
Consider someone trading on the 24Hr time frame and another trading on the 1hr time frame.
The higher you move up the time frames, the more you eliminate market noise. The more you increase your chances of picking price action trade setups that have the best odds of working.
Therefore, there is no broker time that is better than the other. Don’t abandon the broker that you are currently using in pursuit for the New York Close Forex charts broker nonsense.
The only thing that will vary slightly is the signals you will be getting.
Just make consistent decisions. Do not confuse yourself by comparing different broker price feed.
By writing this article, I was intending to show you some of the things that make the best Forex trading strategies that work. If you implement these lessons, you will dramatically improve your trading results. But of course to become an A class Forex trader, you’d need my coaching on this subject. See you on the inside.