How does this happen? When support breaks down and a market moves to new lows, buyers begin to hold off. This is because buyers are constantly noticing cheaper prices being established and want to wait for a bottom to be reached.

At the same time, there will be traders who are selling in panic or simply being forced out of their positions or building short positions because they believe it can go lower. The trend continues until the selling is depleted and belief starts to return to buyers when it is established that the prices will not decline further. Trend-following strategies encourage traders to buy the market once it has broken through resistance and sell a market once they have fallen through support.

In addition, trends can be dramatic and prolonged, too. Because of the magnitude of moves involved, this type of system has the potential to be the most successful Forex trading strategy. Trend-following systems use indicators to inform traders when a new trend may have begun, but there's no sure-fire way to know of course. Here's the good news: If the indicator can establish a time when there's an improved chance that a trend has begun, you are tilting the odds in your favour to use the best Forex trading system.

The indication that a trend might be forming is called a breakout. A breakout is when the price moves beyond the highest high or the lowest low for a specified number of days. For example A day breakout to the upside is when the price goes above the highest high of the last 20 days. Trend-following systems require a particular mindset, because of the long duration - during which time profits can disappear as the market swings. These trades can be more psychologically demanding.

When markets are volatile, trends will tend to be more disguised and price swings will be greater. Therefore, a trend-following system is the best trading strategy for Forex markets that are quiet and trending.

A good example of a simple trend-following strategy is a Donchian Trend system. Donchian channels were invented by futures trader Richard Donchian , and is an indicator of trends being established. The Donchian channel parameters can be tweaked as you see fit, but for this example, we will look at a day breakout. Source: Admirals MetaTrader 4, EURJPY, Daily chart between 18 September to 31 May You can get the Donchian Channel indicator completely FREE in the Admirals Supreme Edition package.

It's called Admiral Donchian. To upgrade your MetaTrader platform to the Supreme Edition simply click on the banner below:. There is an additional rule for trading when the market state is more favourable to the Forex trading system. This rule is designed to filter out breakouts that go against the long-term trend. In short, you look at the day moving average MA and the day moving average.

The direction of the shorter moving average determines the direction that is permitted. This rule states that you can only go:. Trades are exited in a similar way to entry, but only using a day breakout.

This means that if you open a long position and the market goes below the low of the prior 10 days, you might want to sell to exit the trade and vice versa. Now let's look at another system that could be the best trading strategy for you. One potentially beneficial and profitable Forex trading strategy is the 4-hour trend following strategy which can also be used as a swing trading strategy.

This strategy uses a 4-hour base chart to screen for potential trading signal locations. The 1-hour chart is used as the signal chart, to determine where the actual positions will be taken. Always remember that the time frame for the signal chart should be at least an hour lower than the base chart. For this Forex strategy, two sets of moving average lines are chosen for the best results.

One will be the period MA, while the other is the period MA. To ascertain whether a trend is worth trading, the MA lines will need to relate to the price action. The MA lines will be a support zone during uptrends, and there will be resistance zones during downtrends. It is inside and around this zone that the best positions for the trend trading strategy can be found. Below is a daily chart of GBPUSD showing the exponential moving average purple line and the exponential moving average red line on the chart:.

Source: Admirals MetaTrader 4, GBPUSD, Daily chart between 4 September to 31 May Counter-trend strategies rely on the fact that most breakouts do not develop into long-term trends. Therefore, a trader using such a strategy seeks to gain an edge from the tendency of prices to bounce off previously established highs and lows. On paper, counter-trend strategies can be one of the best Forex trading strategies for building confidence, because they have a high success ratio.

However, it's important to note that tight reins are needed on the risk management side. These Forex trading strategies rely on support and resistance levels holding. But there is also a risk of large downsides when these levels break down. Constant monitoring of the market is a good idea.

The market state that best suits this type of strategy is stable and volatile. This sort of market environment offers healthy price swings that are constrained within a range. It's important to note that the market can switch states. For example, a stable and quiet market might begin to trend, while remaining stable, then become volatile as the trend develops.

How the state of a market might change is uncertain. You should be looking for evidence of what the current state is, to inform you whether it suits your trading style or not and should be one of the Forex strategies you should be using.

Source: Admirals Demo Account Example. Many types of technical indicators have been developed over the years. The great leaps made forward with online trading technologies have made it much more accessible for individuals to construct their own indicators and systems, as we've gone through in these trading strategy guides. You can read more about technical indicators by checking out our education section or through the trading platforms we offer. The best Forex trading strategies for beginners are the simple, well-established strategies that have worked for a huge list of successful Forex traders already.

Of course, many newcomers to Forex trading will ask the question: Can you get rich by trading Forex? or: What is the best Forex strategy that always wins? It's important to understand that trading is about winning and losing and that there is always risk involved. In some cases, you could lose more than your initial investment on a trade.

There are no easy Forex trading strategies which are going to make you rich overnight, so do not believe any false headlines promising you this.

Trading Forex is not a 'get rich quick' scheme. However, through trial and error and the use of a demo trading account, you can learn about the Forex market and yourself to find a suitable style. It can also help you understand the risks of trading before making the transition to a live account. Traders that choose Admirals will be pleased to know that you can trade in a virtual environment by opening a demo trading account. Instead of heading straight to the live markets and putting your capital at risk, you can practice your Forex trading strategies on a FREE demo account.

You do need to have patience in both waiting for the right setup and letting the trade develop once you get into the market. Basically, I was drawn to trading strategies where I looked for trade setups once a day, at the close of the daily candle. This made things simple and quick because I only had to make a decision once a day and actually had the time to look at the charts and decide if this was a setup I wanted to trade.

On the lower time frames, things happen a lot faster and you have to make a quick decision. Due to my experiences with day trading, I already had some trading tools built that I could use with the daily chart strategies. I particularly liked using a Trade Management EA to manage the trade after it was placed. I would place the trade, set up the Trade Management EA to move the stop to breakeven, take partial profits or lock in profits, and I was done for the day.

Here are a couple of examples of systems I use to trade the daily charts. I think you can see the potential here for profits. Well, not really. You see, while trading the Daily charts has a lot of what I want in a trading system, I still was not satisfied with it. Quite frankly, it can be a little boring and you still have to be very disciplined to trade this way. You can be in trades for a very long time, going up and down.

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You should notice a pattern in my evolution as a trader. My manual trading experiences have been moving up the time frames, even though I got into trading because of forex robots. First, I tried scalping on the lower time frames, then day trading on the H1 and H4 time frames. I thought trading the daily time frames was only for big players with large trading accounts.

I thought this because on the daily time frame you need to use a larger stop loss than on the lower time frames.

Then, when I learned more about money management , I understood how this type of trading can be traded for nice profits on a smaller account. When you are on the lower time frames you can use a tighter stop. This means that price does not have to go that far in your favor to pick up some nice profits. Price also does not have to move that far for substantial losses as well. While you usually end up placing less trades than you would on the lower time frames, the setups are stronger and can be just as profitable over the long run.

You do need to have patience in both waiting for the right setup and letting the trade develop once you get into the market. Basically, I was drawn to trading strategies where I looked for trade setups once a day, at the close of the daily candle.

This made things simple and quick because I only had to make a decision once a day and actually had the time to look at the charts and decide if this was a setup I wanted to trade. On the lower time frames, things happen a lot faster and you have to make a quick decision. Due to my experiences with day trading, I already had some trading tools built that I could use with the daily chart strategies.

I particularly liked using a Trade Management EA to manage the trade after it was placed. I would place the trade, set up the Trade Management EA to move the stop to breakeven, take partial profits or lock in profits, and I was done for the day. Here are a couple of examples of systems I use to trade the daily charts. I think you can see the potential here for profits. Well, not really. You see, while trading the Daily charts has a lot of what I want in a trading system, I still was not satisfied with it.

Quite frankly, it can be a little boring and you still have to be very disciplined to trade this way. You can be in trades for a very long time, going up and down.

It can take its toll on you emotionally. In the beginning of this series, I said that my journey began because of forex trading robots, but that robot development should be the the END of the journey, not the beginning. After going through my scalping and day trading phases, I believe making robots to trade on the daily time frame is for me.

The daily time frames are more stable than the lower time frames and the setups are stronger. Making an expert advisor to trade the strategies would allow me to set up the accounts and walk away from them completely. I know it might sound strange to want to automated a daily time frame strategy that is quite simple to trade. But the truth is, watching the big pip swings up and down bothers me. MA Period 1: 3 MA Mode 1: 1 MA Price 1: 0 MA Period 2: 5 MA Mode 2: 1 MA Price 2: 0 RSI: The rules: Enter when the candle crosses and closes on other side of MA and RSI is already crossed above the 50 line.

Exit when the EMAs cross in the opposite direction. In the mean time, tell me what you think about swing trading or trading off the Daily time frames. Have you thought about automating a Daily time frame strategy before? Really enjoying these articles.

I am at exactly the same stage after a year. Currently working on programming a few long term strategies. I enjoy trading the daily timeframe. I may look into robots in the future but for now I like the fact I can make decisions without too much stress on the lower time frames.

After these conditions are set, it is now up to the market to do the rest. Conversely, a strategy that has been discounted by others may turn out to be right for you. November 22, 13 Min read. Learn more on How to Cut Losses in Forex. If you think that trading the daily chart fits your lifestyle better than intra-day trading, take this trading strategy for a spin. Status Page. so be prudent, draw your TrendLines, wait for the candle signla, and target a risk ration trade.

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