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3 Forex Trading Strategies To Actually Give Yourself An Edge

The Forex market is a beautiful, massive, and at times all-consuming beast. It is hard to get our minds around, let alone figure out how to profitably trade it. Lucky for us, there are other people who do spend their time figuring out great Forex trading strategies that they are happy to share with the rest of us. Using a strategy that they have developed is a good way to give yourself a leg up in the rough and tumble word of Forex trading.

Fight The Tiger

The idea behind this interestingly named strategy is to go contrarian to what the rest of the public is doing with a particular currency pair at the moment. This strategy is about patience, and it is used on a weekly chart. The idea is to capitalize on the fact that prices tend to revert to the mean given enough time. If a particular currency pair is in a downtrend or uptrend at the moment, it is likely to change course at some point or another.

A trader who uses this strategy will want to view their favorite currency pair for trading on a weekly chart. They then want to examine which trend has been established in the pair up to this point. This is fairly easy to do, one just needs to look at the highest and lowest closing point on a candlestick chart to see how the pair has been trending.

Once the trend has been established, the trader plays the opposite of the trend. It is very important that while doing so they also put in their stop-loss and limit orders. The idea being that the stop-loss is set at 100-140 points away from the current price, and the limit order is placed approximately 50-70 away in the profitable direction.

Bollinger Bands Squeeze Strategy

Market watchers have often said that periods of low price action are followed by rowdier markets. In other words, if there has not been a lot of trading one way or the other in a particular currency lately, then it may be just about the right time to get involved in it, because it is more likely that bigger price moves are just around the corner.

Bollinger bands are a measure of the market volatility, and when there is not a lot of it to be had, they tend to squeeze together towards each other. This is an indication that there could be some new price action in the very near future.

While using this strategy, go with the 240 minute chart of a currency pair that you like. Set the Bollinger Bands to 20 periods and 2 standard deviations with the band width turned on. Once you have that turned on, you are looking for Bollinger Band width near 100 percent.

If all of these factors come together for you, then you are ready to place a trade on this currency pair. Your buy and sell signal are when a full candle finishes below or above the simple moving average. When that happens, you know that it is time to get in on the trade in one direction or the other.

Combination Trading

Finally, you might simple decide to combine strategies or use other tools available to you on the MetaTrader. You have nearly limitless combinations from which to choose. Waiting for exactly the right moment is probably the hardest part to work out, but actually knowing when to trade should not be all that difficult.

It is a balancing act to use enough indicators to get an accurate read of what is going on while at the same time not using too many. Using too many puts you in a position where you are getting false positives, or you have some much information going on that you simply become paralyzed in your trading. Make sure that you do not have too much noise in your trades, or you could end up not trading much at all.

Forex courses are just what the doctor ordered in a lot of cases. You see, learning this particular type of trading takes a lot of time. It is not as easy to understand as something like the stock market. Having someone with expert knowledge teaching you haw to trade is one of the greatest assets that you can invest in. You are investing in yourself when you do something like that, and that is a trade that you know will pay dividends.

The world of Forex has only just started to open up to those of us on the outside. It had historically been the playground of banks and high net worth individuals. Now, it is more democratized, but that means that all the rest of us have a lot of catching up to do.

It is a good idea to respect this fact and take things slowly. Going into Forex without a well-formed and planned strategy is just asking to lose your money. You can do better than that by taking your time and listening to the advice and opinions of others.

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