Here we are going to take a look at 3 Simple Forex trading strategies anyone can use quickly. They’re simple to understand, easy to use, have worked for many traders and should continue to work and that means long term profits.
Let’s look at these Simple Forex trading strategies and why they work…
Many traders make the mistake of thinking that the harder they work and the more complicated they make their trading strategy the more likely it is to work. But, there is no correlation between working hard and being complicated and Forex trading success; you are simply judged on your market timing and the success of your trading signals.
A Simple Forex strategy will have fewer elements to break than a complicated one in the brutal world of Forex trading, therefore, keeping it simple is always the best move.
1. Long Term Breakout Trading
FACT: Most major trends start from new market highs or lows.
This is one of the simple Forex trading strategies that work, buying breakouts on the chart to new highs and selling new lows. Most traders can’t do it because they think they have missed a bit of the move and want to wait for the pullback, but in strong moves this never occurs and they are left watching the move pile up thousands of dollars and they’re not in.
If you focus on long term valid breakouts and time your entries with a couple of momentum indicators, you could make a lot of money. The key to this simple Forex strategy is only to use levels that are considered important by the market.
They occur a few times a year per currency but lead to huge moves and huge profits.
2. The Four-Week Rule
This is arguably one of the simplest and most effective Forex trading techniques. This simple Forex strategy was created by Richard Davoud Donchian, an Armenian-American commodities and futures trader.
This system is totally mechanical (and based upon the breakout philosophy discussed above) and consists of just one rule:
Buy a new four week calendar high and sell a new 4 week calendar low and maintain a position in the market at all times.
That’s it! Simple, yes, but it works – many traders have back tested it and see. You can also add filters to smooth the equity curve.
3. Trading Overbought Oversold
The two other strategies just discussed are long term, now, we will look at a short term strategy for profit – Forex swing trading.
Swing trading simply aims to take advantage of overbought/oversold scenarios within the major trend and you can do this with simple trend lines. All prices get pushed too far up or down, due to greed and fear and you simply want to trade into these extended levels.
Once you have identified areas of support or resistance, check volatility with the Bollinger band and then use the ultimate timing tool – the Stochastic to confirm the move.
You then could take your profit early and then look for the next one.
Swing trading is fun, requires very little discipline — as you don’t have to hold moves for long, and can be learned in a few days.
So there you have it, 3 simple Forex trading strategies that work.