In this article, we will explore the seven (7) proven profitable forex trading strategies for making profits consistently.
The possibility of a trader making a profit from their trades is inevitable, but making these profits is often a problem that can only be solved by having consistently profitable forex trading strategies. This strategy helps the trader decide when it is appropriate to trade and when not.
The Easiest Market to Trade Forex
Forex trades are not majorly based on exchanging currencies but also on specifying the future price movement as similar to stock trading.
Forex traders sometimes attempt to buy low-valued currency with the intention that it would increase and sell currencies that they think will reduce. Traders can perform these activities on three markets: the spot market, forward market, and future market.
The easiest among them to trade forex is the spot market. This market is the principal forex market where traders can exchange their currencies, and its rate is determined by supply and demand.
In this market, pair orders are being executed immediately, with buyers and sellers communicating their buy and sell price.
How to Succeed in Forex Trading
Succeeding in forex trading entails paying much attention to some vital things which will, in turn, affect the success you record while trading.
Some of the essential things a trader should consider to be successful in forex trading include:
- Developing a Trading Plan
Before engaging in a particular trade, you must plan which market you intend to trade in, which amount of risk to take, and when to enter or leave the market.
- Use Money Management Strategy
A money management strategy is a risk control method that a trader must use to know the chances of loss or gain in a trade. You must develop and test your money management.
- Put Protective Stop Loss Orders
A forex trader must put a protective stop loss once they enter into a trade, and it must be a real one. Do not use orders which worked in the past because if you put your stop loss in the wrong direction or place, it means you have conducted a false technical analysis.
- Close Profit – Making Trades on Time
The failure to close your trades on time could end up giving you a minor profit as the market could change its direction. It is best to complete your trade on time or use a stop loss to enable your loss to stay at a minimal level.
- Hold your Position for a Reasonable Period
For a trader to be successful, they must be patient enough to hold on to a position in the market. The market can move closer to your target, and you can earn more by moving the stop further.
- Keep the Same Rate of Risk
Once you start to close several successful trades, you may be tempted to risk a massive amount per trade since you already have an outstanding balance.
This can make you lose more trades and decline your success rate. It is advisable to maintain the same rate of risk to remain on course for further successful trades.
- Be Patient
Forex activity usually takes 5 minutes to 9 months, and most traders are not just in it to make a fast profit but to determine the market action.
You need to decide if you must trade daily, or you could wait for a considerable period to watch the market action.
When to Trade and Not to Trade
Forex markets are open and active 24 – hours and six days a week. Traders can get on the trading platform at any time, but one shouldn’t trade every time.
When trading, you must consider when it’s favorable to enter the market so you can make good trades and earn profit.
Also, you must know when it’s likely for you not to profit to avoid the market. To ensure that you trade during the right and not the wrong time. You can consider the following.
Best Time to Trade
- When Multiple Trading Session Overlap
Some trading sessions, such as London and New York, are ranked as the busiest. One can expect these session overlap to be active that opportunities for trading are made available.
Most traders consider 14:00 GMT as the best time to enter the market, as it Is the period in which London is drawing to close, and many are awaiting the shift to New York.
While the price movement may be unpredictable, the big swings give an excellent opportunity to profit.
- During Times of Liquidity
The best time to trade is during periods of liquidity, which usually reaches its peak during the middle of the week, specifically Tuesday morning through to Thursday.
If you are looking for liquidity, you can hold your trade position till the middle of the week when trading activities are expected to reach their height.
Worst Time to Trade
- National Holidays
These are periods a trader should not trade. During this time, banks, which are one of the major influencers of the forex market, are closed and non-functional, affecting the volume of transactions that will decline increasingly. Traders should avoid any plans to trade during this period.
- During Major News Release
The forex market is influenced by economic data, political updates, and financial reports, and most traders tend to trade after this news.
It may be a little too risky to trade in the forex market during this period unless you clearly understand how to trade on the information.
Top 10 Best Forex Trading Platforms in Australia for Beginners
One of the first decisions a trader has to make when starting at an initial state is the type of trade.
The decision you make will have a massive impact on your trading activities. To some kind, a trader would be required to spend up to 15 minutes daily on a particular trade, while for others, you may have to remain on a specific trade for the whole day.
Considering the time one will need to spend on a trade, the best trading a beginner can start with is day trading.
This trading gives the trader the ability to close all trading positions before the end of the day.
It is a fast type of trade that requires constant monitoring and is the best for beginners just starting their trading journey.
7 Proven Profitable Forex Trading Strategies for Consistent Profit
After considering the best market to trade, when to enter, and not to enter a trade, some of the proven profitable trading strategies that a trader can consider for trading include.
- Gann Trend Following Strategy
This strategy uses an indicator based on William Delbert Gann’s angles to decide the next possible direction of the market.
This strategy may demand a trader to download a technical indicator for their trading. This indicator will display the movement in the market, and you will need to set both your stop loss and take profit to make your trade successful and limit your Losses.
- Support and Resistance
This trading strategy focuses on predicting where the market will most likely turn. The idea is that the market will turn bearish at a resistance level and bullish at a support level.
It means at a resistance level, you should enter a sell trade, and at a support level, you should enter a buy trade.
- Bollinger Bounce Strategy
Bollinger bounce is a strategy that has been around for over a decade. It creates a channel around the market movement on a chart.
If there’s a touch at the lower boundary, there is a possibility that the lower band will act as a support level and cause a reversal.
- The London Breakout Strategy
The main principle of this strategy is that the start of the London session, which is 8 am British time, is usually when the day’s direction will go on the trading pairs.
To trade on this strategy, you need to open an hour chart of the pair you are interested in and mark both the day’s high and low.
To buy, you need to wait for an hour candlestick to close above the high before the London session opens and wait for another one hour candle to close below the low for a sell trade.
- Pin Bar Strategy
This strategy uses an element of Japanese candlesticks to predict the future price movement in the market. The logic of this strategy is the pin bar shows that the market is about to change.
Traders who combine this strategy with other techniques like support and resistance will get a higher success rate.
- Bolinger Breakout Strategy
Also, based on the Bollinger bands, this strategy is designed to help one find the beginning of a trend. Before a trend starts, the Bollinger goes into a tight point of which a break in either direction would signify a possible start of a trend.
For a breakout, you would need to use a stop loss above or below the tight point, and to make a profit use a fixed profit target.
- The EMA Crossover Strategy
The exponential moving average (EMA) is one of the best available technical indicators in the forex market. It helps one to get a directional bias on any chart with just a glance.
EMA crossover strategy usually deploys two EMA’s showing lower and higher values, and a trader can take a position based on the direction of the crossing.
You can enter a sell trade if the lower value EMA crosses the higher value, but the stop loss should be at the most recent low in a buy trade.
How to Predict Forex Trends
Forex trends are changes that occur in the forex market as a result of some factors. Predicting a trend would entail using some efficient tools such as:
- Moving Averages
The moving average is one of the most used tools in predicting a trend in the forex market. This technique aims to determine the middle of a movement by evaluating periods when a short-term moving average claims above or falls below a long-term moving average.
While using moving averages, a trader can calculate momentum, which can help in predicting a trend. One of the popularly known momentum indicators is the Moving Average Convergence Divergence (MACD). This indicator created by Gerald Appel helps measure the difference between a short-term moving average and a long-term moving average.
- Support and Resistance
The movement of exchange rates through levels of support and resistance is another indicator of a forex trend. Support is the price level where demand buys price, while resistance is the price level capped by much supply.
When the exchange rates move above resistance, an uptrend could be coming, while a movement below the support could be indicating a future decline in price.
How to Predict a Forex Pair for Trading
Predicting a forex pair for trading will entail a trader considering some characteristics of specific currency pairs. The currency market focuses on liquidity, but sometimes it is forgotten as there’s always supply and demand. The essential features a trader should consider are:
- Time of Activity
One of the essential characteristics a trader should consider while predicting a forex pair is the time of the activity. If you trade during a specific period, you should pick the most active pair during that period. This period is when trade volume is high, and it might move reasonably.
Volatility is the fluctuation range of a particular currency pair over a certain period. Some currency pairs trade in a very narrow range, while others trade in a wide range. The more increasingly the volatility of a pair gets, the more the chances of profit. However, you must always maintain your stop loss. You can use the Average Time Range (ATR) to assess and compare the volatility of different pairs.
- The Cost of a Trade
Another criteria one should look at before choosing a particular currency pair is the cost of a trade. In forex, average expenses are usually the difference between a buy and sell rate.
On advanced ECN accounts, the spread is minimal but may involve a small commission for operational activities.
Watch the video below to know about the proven profitable forex trading strategies to make daily profits:
Strategies to Get 50 Pips a day in forex
This strategy is a day trading strategy that intends to capture significant currency pairs’ early market movement, focusing on GBP/USD or EUR/USD currency pairs.
This strategy is clear, but a trader should always consider risk management. The trading rules to get 50 Pips a day are:
- Once the 7 am GMT Candlestick closes, you need to open two opposite orders: a buy stop order two pips above the high and a sell stop order two pips below the 7 am candlestick.
- Once the price activates one of the pending orders, you can then cancel the other pending other.
- Place a stop-loss order anywhere from 5-10 pips above the high/low of the 7 am GMT candlestick after the close to control your trading risk. If you feel the candlestick is too short, you can increase your stop loss from 15-20 pips.
- Set your profit target to 50 pips.
- Once you have entered the trade, you can wait for the market to do its work.
- If your trade reaches a profit target for the day, repeat the same for the next day.
- If your trade has a floating profit or loss, wait until the end of the day and exit, irrespective of profit or loss.
Profitable forex trading strategies are techniques traders should consider and adopt to help boost their trading success.
These strategies are not entirely error-free, and you should try these methods on a demo account before actually risking your actual funds on them.
We hope this article will help guide you through your trading decisions. For all your views and opinions, kindly drop a message in our comment section.
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