Whether you’re a seasoned trader or just starting out in the forex market, these strategies can cater to your needs. It’s challenging, especially when you’re new to the forex market, to find a strategy that works well with your schedule and overall profit goals. Finding a strategy that you can commit to and see consistent profitability is where the challenge lies, so here is a narrowed down list of some of the most effective strategies that have strong risk-to-reward ratios to help increase your profitability.
If you’re the kind of trader that likes to make multiple trades a day, forex scalping is the strategy for you. Forex scalping commonly refers to traders making a large amount of small-scale trades producing a high volume of small profits. Unlike the average day trader, scalpers tend to trade off of tick charts and one-minute charts. Scalpers skim small profits multiple times a day with high leverage making trades with few pips profit– but it sure does add up!
Forex scalping success is heavily dependent on the amount of time you have to trade, and if you have the patience along with attention to detail to analyze multiple orders. If you have a great deal of time to put into trading the forex market, and the keen ability to detect market trends on the drop of a dime– this strategy is right up your alley.
5 Minute- The Cancel and Replace Method
The cancel and replace method allows a trader to react to the market in real time to ensure higher profits, and less risk. Just as the name suggests, the crux of the method is to cancel your current stop-loss and replace it with a new one as the market continues to trend in a certain direction.
This method is used in a series of 3 steps. The first step is to establish when you’re buying into the market, the second step is to establish your initial stop-loss, and the third step is to follow the market’s direction. By establishing a series of market highs and lows, you can objectively analyze which direction the market is trending and move your stop-loss accordingly.
This strategy had to make it on the list for the mere profit potential that is derived between the open of the London session at 3:00 am and then 5 hours until the US session begins. The London trading session is known to be one of the biggest market movers, and can even set a trend in the first three hours that will continue onto US trading sessions.
The market movements that happens during the first few hours of the London open can create huge trading opportunities that could make a serious impact on your wallet. This, of course, is all dependent on being able to catch these trends in the early hours of the London market opening and make the proper trade movements. This is a strategy that is great for a full time trader that can dedicate a great deal of time to focus on the London trading sessions in great detail.
If you are tired of using indicators that have lead you astray on a trade, this strategy may be your solution. Instead of relying on an indicators predictions, it will be affected by price alone. This strategy is highly favored because instead of and indicator trying to predict what and when to trade, this action is based on what has happened previously in the history of trades.
This type of strategy looks at past prices and trades, and helps you to read and analyze them to detect what has happened. This will then lead to a more structured capability to plan and build a strong approach for your future trades. Price action is a surefire strategy to manage your probability on trades through previous price patterns repeating themselves.
If you’re looking for a simple and easy to use strategy, basket trading is an effective strategy that your can tailor to your specific financial needs. This strategy is widely known for combining different currency pairs at one particular time, and works best for a trader that prefers to juggle multiple charts.
What’s great about basket trades is that you can use this strategy as an all long or all short approach, or you can combine the two. This strategy involves two of the oldest tricks of the trade– follow the trend and cut your losses early so that your profits can run. This trend-following strategy tends to have a very good risk-to-reward ratio that makes trading with this strategy that much more appealing.
There is an overwhelming amount of trading strategies and indicators out there in the forex world, but these are a few tried and true strategies you can work into your trading plan. Whether you’re a full time trader or trading in the forex to supplement your income, keep in mind there is a strategy out there that will work for you that will help you reach your ultimate trading goals.