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What is a Forex Trading Strategy?
A forex trading strategy is a technique used by a forex trader to determine whether to buy or sell a currency pair at any given time. Forex trading strategies can be based on technical analysis, chart analysis or fundamental, news-based events. The trader’s currency trading strategy is usually made up of trading signals that trigger buy or sell decisions. This implies that they can be designed by the trader or vendor, for a certain fee. A forex strategy can come in the form of a manual or automated trading system.
A manual trading strategy will involve a trader having an already set rule or condition that he’s required to adopt based on price/indicator pattern, while he sits in front of his computer to wait for such patterns to develop. Many traders use techninal indicators to develop their manual systems. The trader is required to make sense off the pattern by interpreting whether it is a buy or a sell alert. Automated Strategy An automated strategy, on the other hand, is an algorithm with set rules or conditions, which are subsequently molded into a software, better known as a forex robot (EA). Most automated systems are designed for the Metatrader 4 (MT4) trading platform. It that can be plugged onto your charts, thereby trading on your behalf – it is potent enough to initiate buy or sell orders for the trader. In most cases, automated trading is said to eliminate the human side of psychology that greatly hampers smooth trading in a lot of traders.
Free Forex Trading Strategies
When selecting which type of forex trading strategy to use, you have two options:
- You either pay for them
- You can use any of the free Forex trading strategies on this site and test them out.
The trouble with paid Forex trading systems is that:
- You can spend a lot of money on buying a Forex trading strategy that does not fit your trading style.
- Later down the line you realize it does not fit your trading personality so you won’t be using it once your initial fascination starts to wear off. Waste of money.
With free Forex trading strategies:
- You have the option to test them out without paying for them and eventually find a trading system that suits you.
- Free Forex trading strategies can make money in Forex.
With that in mind, this Forex website has hundreds of Forex trading strategies for all kinds of traders from beginners to advanced traders.
Forex Scalping A strategy that is designed to work on much lower timeframes i.e. 1-Minute and the 5-Minute timeframes, is a forex scalping trading strategy. This type of Forex trading strategy are designed to scan the market for small profits on every trade entered, for instance 5 pips, 10 pips or maybe 15 pips profits. What this strategy does is that it replicate such trades across the trading session, thereby yielding massive gains when added up. Here are the list of forex scalping systems on this site:
What Is Forex Scalping?
Forex scalping is a day trading technique where Forex trader executes a trade and exit within minutes or seconds on some cases. So essentially, when you a forex scalp trader, you are not looking for big profit targets, you are looking for very small profit targets per trade like 5 pips, 1o pips or even 15 pips. And you are trying to take many trades throughout the trading session with these small profit targets. So what’ the point of Forex scalping then? Well, here’ the thing: the goal of the FX scalper is to make many trades throughout the trading session and hope that in the end, all those small profits will add up and exceed the trading losses incurred (and take care of spread costs for trading). Many Forex trader do not like Forex scalping because they see no point in going for very small profits and being involved with this kind of high pressure trading environment. But the funny thing is that hare are many trader that do like Forex scalping. If you are interested, this forex website also has forex scalping strategies which you can check them out and try if you like by clicking here.
Forex Currency News Trading Strategies
Trading news can be both profitable and extremely risky as well. If you don’t know what to do, do not trade news. You can wipe your trading account within a few seconds to minutes because price can move against you so fast you will be caught out. But if you are not using Forex news trading strategies and then these days, its best to check everyday before you trade what major economic news releases are scheduled to be out and then decide if you wait until the news is released then trade or just simply wait for another day.
(Basic) Simple Forex Trading Strategies For Beginners
If you are a beginner, having a complex and advanced Forex trading strategy will confuse the heck out of you. Take your time! What you need is to start with are basic Forex trading strategies and work your way up from there. These are really easy forex trading strategies. Being a basic Forex trading strategy does not mean they are going to be unprofitable trading systems. Simple here means that the trading rules of these Forex trading strategies are really easy to understand and execute when you are trading. There are not many conditions or rules to confuse you. That’s why these are suitable forex trading strategies for beginners. These are really simple forex trading systems suitable for beginners who are starting to trade forex. Being simple does not mean that these forex strategies are not profitable. As a matter of fact, simple forex trading systems are much easier to use and can be extremely profitable. Once you get the hang of it, then you can start to develop your own forex trading systems or move on to more advance forex trading strategies and even price action forex trading strategies. If you are a beginner forex trader, you really don’t want to confuse yourself too much with all the other stuff…just find a simple forex trading system and demo trade it out for a while. What you will find is that the simplest forex trading systems are the ones that can make money. Find out, stick to it and try to make it work for you by sticking to its trading rules with proper trading risk management. Price Action Price action trading is simply technical analysis trading using the the action of candlesticks, chart patterns, support and resistance levels to execute orders. To be a better price action trading, you need to have a solid understanding of how price action theory and how to trade it in real time. Here are the list of forex price action systems on this site:
Essential Elements Of A Forex Trading Strategy
What is a Forex trading strategy (system)? A forex trading strategy is simply a set of rules telling you when to buy or sell when certain market conditions are met in order to make a profit. Any forex trading strategy should have these 4 core but basic elements:
- the condition(s) that should trigger you to buy or sell.
- where to place your stop loss order,
- where to place take profit target
- and the system should have rules on how to manage a trade.
That’s the definition of a what a forex trading strategy is. If a a trading system that does not have any one of these core elements, the you are going to be left confused in implementation. To put simply, forex market can be said to be chaotic. So to have order in a chaotic market, you got to have rules.
Forex Strategies Resource
There’s also a lot more Forex strategies resources in this Forex website which includes:
Forex Trading Strategies That Work
Every forex trader is different…what you like is not what I like. What you think is the best Forex trading strategy for me will not be the same. This question is left for each individual Forex trader. You need to find the Forex trading strategy that fits your trading personality and when you do…then that would be your best forex trading strategy (in my opinion). Therefore, if you are looking for Forex trading strategies that work, just understand that one system cannot work for all. I may like price action trading but you may like to use indicators in your trading system. You need to research and test and find out what type of forex trading strategies and systems work for you simply because every body is different. I’f you like moving average forex trading strategies, there’s lots of them on this site. If you like scalping Forex trading strategies, they are here to. If you like news trading strategies, they are here to. If you like day trading strategies and systems, there are here to. If you like swing trading strategies and system, many of the strategies here are swing trading systems. All you need to do is find one that you like and make that Forex trading strategy work for you. Or if you don’t find a Forex system that you like but there’s one that you “sort of like” but still does not really fit..then why not tweak it? Why not change it by combining a few different trading techniques or ideas from “this trading system” and “that trading system” and then make a trading system you are satisfied with? Nobody’s going to stop you. Now, lets say that after you’ve found your Forex strategy that you like…what do you do next? Well, open a demo trading account with a Forex broker and test out the system to see how it works in real live market conditions. That’s the only way you know how the forex trading system will work. All trading strategies and systems may look nice on this site but if you like on trading system, you really need to test it out. Then once you’ve are satisfied, then you can start trading with real money. This is where the fun begins…trading with live money. How many Forex trading strategies do you need? If you prefer to trade only one type of trading setup then you’d only need on forex trading system. But if you like to trade different market conditions then having several solid forex trading systems for each of the different market conditions is essential. Forex example:
- if the market is in a trend, then you’d be using a trend trading system
- if the market is in consolidation or in a range, you’d have to use a range trading system
- if the market is getting to major support or resistance levels, you may have to switch to using a support and resistance trading system.
So its really up to the forex trader to decide. If you are beginner forex traders, I suggest you just pick only one forex trading and stick to it.
Swing Trading vs Day Trading?
Every forex trader is different. Some like trading shorter time frames and keeping their traders open for shorter periods which means day trading technique sort of comes into play here. But then there are forex traders that are swing traders… Swing traders are those traders that take a trade and have a much medium to longer term outlook. This means a trade can be opened and it may take a day to week or even months before the trade is closed. Swing traders like to wait for the trade to play out…how long it might take depends on price action and market movement really. The advantage of swing trading therefore is the fact that, all the minor price fluctuation in smaller timeframes (which is the domain of the day trader) is ignored and a larger long term view is held regarding each trade that is placed. The advantage of swing trading therefore are these:
- trades held for days, weeks and months mean a lot more profit
- minor price noise is irrelevant
- trades are often entered at swing points, which are in most cases, present really low risk, high reward trade entry points.
The only main disadvantage of swing trading is you’ve sometimes have to maintain the trade even in its up and down swings of price as it heads towards your profit target. The advantages of day trading are these:
- profits or loss realized in a shorter timeframe during the day.
- much more trading opportunities can be found during the day.
The disadvantages of day trading are these:
- small profits for each trade
- potential to over-trade
- high pressure and hectic trading environment and need to be on constant alert to scan your trading charts for setups.
Scalping is also a very shorter form of day trading…it takes minutes or seconds to open can close a trade.
Best Hours To Trade Forex?
Opinions may vary but one thing is certain…its much more easier to make money trading the forex market when the fx market has volatility and momentum. And so the when it comes to that, many forex traders like to trade the forex market during the London Session and the New Your Session. The London forex session is where huge volume of forex transactions are made everyday which is followed next by the New Your Session. In the Asian forex trading session, its is most often characterized by thin volumes during the day. Its best in my opinion to trade forex during the London fx hours or during the New Your forex trading session.
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Best Currency Pairs To Trade?
Choosing a currency pair to trade is very important. Here’s why:
- some currency pairs do not trend very well
- some currency pairs only trend well during certain times during the day, for example, london and new your trading session.
- some currency pairs have very large spreads in excess of 3-5 pips with some forex brokers and if you trade one standard contract, that’s roughly $10-$50 loss right away after you enter a trade and price has to move by this much in the direction of your trade to make that trade breakeven.
- some currency pairs have very choppy characteristics which means they have tendency to spike and if your stop loss is too close, you’ll get stopped out
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Holy Grail Of Forex Trading?
The holy grail of Forex trading is money management. Sometimes called Trading Risk Management. You get this one right by being disciplined and doing the right thing and what you will see it that it’s only a matter of time before you will start making good money trading forex. What blows millions of forex trading accounts is Money Management. So doesn’t it make sense to grow yourself in getting this right? You see, no forex trading strategy will give you 100% success rate. None. Once a trade is placed, the outcome that you want is not guaranteed because you can’t control the market price and where its going to go next! You are at the mercy of market forces of supply and demand buyers and sellers. But what you can control is RISK. That’s the only thing you have absolute control over in a trade…your trading risk. You decide how much of your account you are going to risk in a trade.
Be A Profitable Forex Trader
Many traders make and lose a lot of money trading Forex. Why because the human emotion is involved…greed and fear come into play. When your real money is on the line, you’d tend to do things you’d never do while you’d demo trade. The temptation to trade a lot and make a lot of money “right now” is one biggest killer of forex trading acccounts. It all comes down to controlling and managing your risk. Failure of this and you will not last long in trading forex online.
Can you make money trading Forex?
Yes and No. This is not a surprising answer. You can definitely make money. And also you can lose a lot of money. The secret to making money in forex trading is managing your trading risk and finding a forex trading strategy that fit you. Everything else is irrelaveant. If you can control your emotion and manage your trading risk, you will do well. Yes, if you manage your trading risk and have balls of steel…Really, you can be profitable if you eliminate those things that sabbotage your forex trading like:
- over trading
- risking too much
- not following your forex trading system’s rules
- not following your trading risk management plan that you had.
- not waiting for the right trading setups to happen before taking a trade because you are in a “rush” to take a trade
Its these things that will make you an unprofitable Forex trader and you can lose a lot of money if not controlled. There’s a saying ” I’ve seen the enemy…and its me.” This is very true in Forex trading. You are your worst enemy when it come to Forex trading. If you are new trader, you will see this and think I’m lying… But wait till you’ve trade real money for a while and you will know what I just said is true. How much do you risk per trade? There’s so many schools of thought about how much risk one should risk per trade. But remember this: if you risk more of your account in a single trade, it would not take long before you can wipe out your forex trading account but on the other hand, you can make a lot of money if the trade goes right. But you are trading forex for the long term, it makes complete sense to risk a small percentage of your trading account in each trade. The reason is simple: its would take so many losing streaks to blow your forex trading account. So what’s the best % risk? I’d say stick to 1-2% of your account in each trade. You may even go up as 5% risk per trade. But remember, with a 5% risk per trade, all it would take is 20 consecutive losing trades and your account will be wiped out. The more you risk the more you lose or you can make more. You play this risk management game right and you can be making a tonne of money trading forex.