This way we can stop a trade turn into a bigger loss. First, we can see that there is a bearish engulfing candlestick pattern that occurred after price break below the 50 SMA and this is a valid trade entry as well.

What happened after we went short? Within two candles price went up and closed above the bearish engulfing candlestick. Which mean our trade entry got invalidated. Now What? Simple, as a trader and as a Risk Manager, you should cut your losses because our trade entry got invalidated and there is no reason to keep hoping that this trade will turn in our direction.

In this step, we are giving some time period to see how the trade plays out. If the trade has the momentum to move in our favour within that time period we gave, there is no problem. Simply because the momentum is not in our favour. According to the above chart, we got a breakout entry with a strong bearish engulfing candle. This is our trade entry and we can place a short trade here. Now in this scenario price never tried to close above the entry candle. This is how you take control of your losses and keep your losses short, so that when you hit winning streaks and bigger winners you asymmetrically compound your gains.

According to the above chart, we got a strong bearish engulfing entry signal following the break of the 50 SMA. We can place a short trade there. Right after we executed a short trade, momentum began to kick in and price began to move in our favour, eventually reaching our 1R profit target.

Have a look at the red stop loss line. This is the third step on how to cut losses. At this point, there is little to no risk on our trade. We dramatically reduce the risk of our trade using these simple trading techniques. Step 4- When the price move 1. This is where we turn our risky trade into risk-free trade by moving the stop loss to breakeven after the price reached 1.

Just like the previous example, in here price first reaches to 1R level. But in here price did not stop after reaching 1R profit level, it moves down and hit our 1. Right after that, we can move the stop-loss to breakeven and take all the risk out of the table. Now we have no risk attached to the trade, next, all we have to do is to let the trade play out and manage the trade as the price move in our favour.

Managing trade is easy. You just have to trail your stop loss while the price move in your favour. As previously stated, after a trade has hit 1. The next question is how we will manage our trade and profit after the price has reached 1. So, managing a trade is not that difficult, especially because we apply a set of rules that are simple to follow and execute. For example, when the price is 3. That way we can leave 1. Have a look at the chart below. First of all, have a look at the trade entry.

This is an initial breakout entry. Because we got a bullish engulfing candle on the initial breakout and with that, we placed a long trade.

Right after the trade entry, the price moved in our favour without taking much time. As the chart is shown above, price pushes all the way up to 2. Which mean we should trail stop-loss to 1R in the profit.

That is what we did the above. What happened after the price reached 2. Market reverses in the other direction, right? Fortunately, we had our stop-loss at 1R. Therefore we were able to book 1R profit without giving all the unrealized profit back to the market. One last thing, when trading with this simple profitable forex trading strategy, you should place your Take Profit order at 5R. Have a look at the above table for reference. Is this simple trading strategy suitable for you?

Is it compatible with your daily routine? Is it a good fit for your personality? Consider this question, and I hope you now understand every detail of this trading strategy.

If you have any questions about this method, please leave them in the comments area. A very good reference for another simple forex trading strategy from forex4noobs: FOREX TRADING STRATEGY: The Ultimate Guide Update. Your email address will not be published.

Save my name, email, and website in this browser for the next time I comment. We Are… Trade Revenue Pro. We specialize in reverse trading. More Over Our Trading Technique Enable Everyone, Even Novice Forex Traders to Recognize and Ride the Trend Reversals with Higher Risk to Reward Ratio. Trade Article. Simple Yet Profitable Forex Trading Strategy Consistent Monthly Gains. Do you find it difficult to make consistent monthly profits from forex trading?

Then, this simple Profitable forex trading strategy is for you. Now, what is this trading strategy? What is This Simple Profitable Forex Trading Strategy? Leave a Reply Cancel reply Your email address will not be published.

About Us. Recent Posts. Buying Bitcoins Without KYS — Is It Possible? Read More ». pionex bot trading Read More ». Intraday Reversal Trading Strategy — How to Catch Big Reversals Read More ». Recent Trade Ideas. Why Do Most Day Traders Fail?

A Calm and Profitable End to the First Month of Read More ». What a Way to Start , UP A Place for Proven Trading Strategy and Trading Education. Get Started. Trade Article Trade Ideas. About Us Contact Us. This strategy may require you to download a technical indicator for your trading platform. For Metatrader 4, there are lots of Gann related indicators available for free. One of them is shown in the chart below:.

When the Gann indicator displayed shows a yellow ribbon, it means that the market has potentially entered a downtrend. The blue ribbon signifies an uptrend. Ideally, you should enter a position just after the close of the candle that triggered the colour switch.

The entry candles are marked by the three arrows. As you can see on the chart, some of the trend switches were false dawns that would have led to a losing trade. However, the positive trades were richly rewarding. This is why you need to be careful with your Stop Loss and Take Profit limits when using this strategy. Many users of this strategy place a Stop Loss limit at the low or high of the signal candle the first candle that caused the switch , depending on the direction of the trade.

They also trade without a designated Take Profit level, trailing the profits instead. This is a powerful range trading strategy that attempts to predict where the market is likely to turn. The logic is that the market will turn bearish at a resistance level, and bullish at a support level. This means that at a resistance level, you enter a sell trade, and at a support level, you enter a buy trade.

There are many tools for establishing support and resistance levels. Some of the options include Bollinger Bands, Pivot Points, Fibonacci Ratios, and more. Choose a specific method and research on it extensively.

With Pivot Points, for example, you can map out the possible support and resistance levels for a day, week or month, and take trades off these levels. Below is a chart of what trading off a support or resistance looks like:.

You can see how price reacted at the top of the range resistance and bottom of the range support. If you enter a sell at resistance, your profit target is the support level and vice versa. The Stop Loss limit should be pips away from the latest high or low before your entry.

The pinbar strategy uses one element of Japanese Candlesticks to predict future price movement. The logic is that a pinbar shows that the market is about to change direction—like an arrow created by the behaviours of market participants. It is often used in combination with other strategies like Support and Resistance for a higher probability of success.

In the chart above, the red arrow shows a pinbar formed exactly on a support zone. This market went on to go on a mini bullish run. The profit target when using such strategies can be the next support or resistance zone, or multiples of your Stop Loss value for a good risk to reward ratio. The Stop Loss limit should be placed below or above the pinbar, for buy or sell trades respectively. The Bollinger Bands is another powerful technical analysis indicator that has been around for decades.

It creates a channel around the market movements on a chart. If the touches the lower boundary, there is a possibility that the lower band will act as a support level and cause a reversal. This is shown in the image below. Gold real-time quote on Mitrade. In this case, wait for a bullish candle close, and enter a buy trade. Place a Stop Loss limit a few pips below the latest low. Your target, on the other hand, should be the upper Bollinger band.

Still based on the Bollinger Bands, this strategy is designed to help you find the start of a new trend. Before the trend starts, the Bollinger goes into a squeeze.

A break of it in either direction signifies the possible start of a trend. The red arrow in the image shows the squeeze while the green arrow signifies the breakout. In our chart, entering a sell trade at the breakout of the lower Bollinger would have yielded a decent profit. If the breakout happens on the upper Bollinger, it is a buy trade. For a breakout entry, place the Stop Loss limit directly above or below the candles in the squeeze area.

To secure your profits, use a trailing stop or a fixed profit target. Are you trading on Metatrader 4? Here are some important tips you should keep in mind when using any forex trading strategy:. Regardless of how good they look, ALL strategies will have losing trades. Proper money management ensures you don't go into deep drawdown or lose your entire trading account on those three losing trades. Although we have talked about using multiples of your Stop Loss limit as the profit target to ensure a positive risk to reward ratio, you need to be realistic.

Setting a pips profit target on a currency pair that has been moving an average of 50 pips per day over the last one month, is not realistic—especially when you don't intend to hold the trade for long periods.

Some strategies do well on all timeframes, while others will only work on the hourly chart and higher. Experiment with various timeframes and choose what works for you. When you have decided on your strategy, stick to it. Remember, trading is a business of probabilities.

You don't know which trade will end in a profit or loss. Keep your emotions in check, follow your strategy strictly, and let the numbers work in your favor. A good forex trading strategy is a must if you are to achieve your dreams of making consistent profits. Go over the options we have provided in this article, choose the one you feel most comfortable with and test it on a demo account after a backtest.

At the end of the test, you can start trading with it on your live account. GO RISK-FREE WITH MITRADE! This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please read the PDS before choosing to start trading. Risk Warning: Trading may result in the loss of your entire capital. Trading OTC derivatives may not be suitable for everyone.

Please consider our legal disclosure documents before using our services and ensure that you understand the risks involved.

To have a shot at success in forex trading, you need robust forex trading strategies that work. This article covers some effective strategies you should consider, and general tips that can increase your chances of generating consistent profits in the market.

Forex trading strategy is a methodology a trader relies on to know when to place a buy or sell order on any tradable instrument.

A good strategy contains both entry and exit parameters, thus removing the guesswork from the trading experience. The best forex traders plan ahead on how to take a position in the market.

Trading without a plan may work for some time, but the likelihood of success, in the long run, is slim to none. With a forex trading strategy, you will have a clear idea of where the market MAY beheaded. Discover Forex trading with Mitrade! There are three main types of forex trading strategies. They are covered below. Scalping forex strategies are designed to capture micro market movements within a short period. Most scalping forex strategies require you to target a few pips usually less than 10 in 15 minutes or less.

This leads to high transaction costs spreads and commissions. The use of automated software EAs can help some traders deal with this aspect, but not many people have the skill. Trend following strategies are designed to generate trading opportunities in the general mid-term direction of the market. The logic behind such strategies is the fact that the market is likely to continue in a specific direction for a period. They wait for the market to move and then join in the existing direction as early as the strategy dictates.

Even when using a trend following strategy on a short timeframe like the 5-minute chart, there may be less than 4 trading opportunities per day. Range trading strategies try to extract profits from the market when it is in a lull or moving with no bias for a specific direction. In such a situation, the tradable instrument oscillates between specific higher and lower barriers. Such strategies attempt to help you catch the top or bottom of a move. This means trying to pick a bottom or top when the instrument is strongly bearish or bullish.

Automating the process with software or limit orders increases the chances of a loss when the market eventually moves out of the range. Now that you know some of the main categories of forex trading strategies, here are some powerful strategy options you should consider adding to your trading arsenal. Remember, these strategies are not infallible—none of them is. They can help you generate profits, but you will also have losing trades. Use them at your discretion.

Try them out on Mitrade demo account before risking your live funds with them. To trade this strategy, open the 1 HR chart of the pair you are interested in, and mark the high and low for the day from the open of the Asian session to the start of the London session.

For a buy trade, wait for an hourly candle to close above the existing high before the London session opened, and wait for an hourly candle close below the existing low for a sell trade. The Take Profit level should be at least two times the Stop Loss value. The Exponential Moving Average EMA is one of the best technical indicators in forex trading.

It helps you to get a directional bias on any chart with just one glance. EMA crossover strategies deploy two EMAs of different values lower and higher and then take a position in the market based on the direction of the crossing. Some popular EMA combinations for this strategy include 5 and 7, 10 and 20 the combination used in our sample image and 15 and Generally, you should enter a sell trade if the lower value EMA crosses the higher value option from the top to down.

It is signifying a downward trend shown in the image above. If the lower value EMA crosses the higher value variant from the bottom, it is showing an upward trend. In a buy trade, the Stop Loss limit should be at the most recent low. In a sell trade, it should be at the most recent high. The Take Profit level should be at least two times the Stop Loss Value.

Some users of this popular trend following strategy hold their position until they get an opposite crossing, but this increases the chances of losing some or all of your existing profits if the market makes a sudden reversal.

This strategy may require you to download a technical indicator for your trading platform. For Metatrader 4, there are lots of Gann related indicators available for free. One of them is shown in the chart below:. When the Gann indicator displayed shows a yellow ribbon, it means that the market has potentially entered a downtrend. The blue ribbon signifies an uptrend. Ideally, you should enter a position just after the close of the candle that triggered the colour switch. The entry candles are marked by the three arrows.

As you can see on the chart, some of the trend switches were false dawns that would have led to a losing trade. However, the positive trades were richly rewarding. This is why you need to be careful with your Stop Loss and Take Profit limits when using this strategy. Many users of this strategy place a Stop Loss limit at the low or high of the signal candle the first candle that caused the switch , depending on the direction of the trade. They also trade without a designated Take Profit level, trailing the profits instead.

This is a powerful range trading strategy that attempts to predict where the market is likely to turn. The logic is that the market will turn bearish at a resistance level, and bullish at a support level. This means that at a resistance level, you enter a sell trade, and at a support level, you enter a buy trade. There are many tools for establishing support and resistance levels. Some of the options include Bollinger Bands, Pivot Points, Fibonacci Ratios, and more. Choose a specific method and research on it extensively.

With Pivot Points, for example, you can map out the possible support and resistance levels for a day, week or month, and take trades off these levels. Below is a chart of what trading off a support or resistance looks like:. You can see how price reacted at the top of the range resistance and bottom of the range support.

If you enter a sell at resistance, your profit target is the support level and vice versa. The Stop Loss limit should be pips away from the latest high or low before your entry. The pinbar strategy uses one element of Japanese Candlesticks to predict future price movement. The logic is that a pinbar shows that the market is about to change direction—like an arrow created by the behaviours of market participants. It is often used in combination with other strategies like Support and Resistance for a higher probability of success.

In the chart above, the red arrow shows a pinbar formed exactly on a support zone. This market went on to go on a mini bullish run. The profit target when using such strategies can be the next support or resistance zone, or multiples of your Stop Loss value for a good risk to reward ratio.

The Stop Loss limit should be placed below or above the pinbar, for buy or sell trades respectively. The Bollinger Bands is another powerful technical analysis indicator that has been around for decades. It creates a channel around the market movements on a chart. If the touches the lower boundary, there is a possibility that the lower band will act as a support level and cause a reversal.

This is shown in the image below. Gold real-time quote on Mitrade. In this case, wait for a bullish candle close, and enter a buy trade. Place a Stop Loss limit a few pips below the latest low. Your target, on the other hand, should be the upper Bollinger band.

Still based on the Bollinger Bands, this strategy is designed to help you find the start of a new trend. Before the trend starts, the Bollinger goes into a squeeze. A break of it in either direction signifies the possible start of a trend. The red arrow in the image shows the squeeze while the green arrow signifies the breakout.

In our chart, entering a sell trade at the breakout of the lower Bollinger would have yielded a decent profit. If the breakout happens on the upper Bollinger, it is a buy trade. For a breakout entry, place the Stop Loss limit directly above or below the candles in the squeeze area. To secure your profits, use a trailing stop or a fixed profit target. Are you trading on Metatrader 4? Here are some important tips you should keep in mind when using any forex trading strategy:. Regardless of how good they look, ALL strategies will have losing trades.

Proper money management ensures you don't go into deep drawdown or lose your entire trading account on those three losing trades. Although we have talked about using multiples of your Stop Loss limit as the profit target to ensure a positive risk to reward ratio, you need to be realistic. Setting a pips profit target on a currency pair that has been moving an average of 50 pips per day over the last one month, is not realistic—especially when you don't intend to hold the trade for long periods.

Some strategies do well on all timeframes, while others will only work on the hourly chart and higher. Experiment with various timeframes and choose what works for you. When you have decided on your strategy, stick to it. Remember, trading is a business of probabilities. You don't know which trade will end in a profit or loss.

How can I Start Trading with Zero Capital? Support and Resistance Strategy This is a powerful range trading strategy that attempts to predict where the market is likely to turn. Hence, all the trading signals are generated by the trading system and all you have to do is to place your orders and manage them according to the rules of engagement. Consider this: even if you have a poor win rate, you can still be profitable due to the higher risk to reward ratio. An important first step is to set proper risk-reward ratios and to have realistic profit targets. Pairs Offered.

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