Trading strategy: development, example, analysis of trading strategies. The Best Forex Trading Strategies

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

One of the conditions to profitably trade on the Forex market is to have a well-designed, profitable trading strategy. Therefore, special attention is paid to this issue when training in the Forex market.

Why do you need a trading strategy

The Forex currency market has its own specific laws. On the basis of such laws, currency speculation is carried out. The movement of the market does not occur in a chaotic manner, it operates according to its own rules. Any experienced trader understands this and therefore uses some method in his work. With the help of a trading strategy, all transactions of a currency speculator are made. Not a single professional will trade just like that, at random or by intuition, entrusting his deposit to luck. There is a well-defined order in every trade of a trader.

Choice of strategy

Every beginner who enters the Forex market must decide on the method of trading with which he will work. Forex trading strategies have a wide variety. Therefore, choosing the rightmethod must be approached with great responsibility. Depending on the chosen strategy, the profit or loss of the future trader will be formed. Forex trading strategies are selected individually. The choice of method depends on many factors, such as:

1. Time range. A certain trading method is selected, for example, scalping trading or long-term trades.

2. Acceleration of the deposit. The system of work with which the trader will work is taken into account. This refers to the aggressive or classic method.

3. The nature of the trader himself. The psychological factor also influences the choice of strategy. If a trader is inexperienced and timid, then he will trade carefully, using the classics. Conversely, ambitious, assertive, ready for various experiments, such a beginner will use an aggressive trading method. It's just that for him it will be closer to his psychological characteristics.

Variety of trading systems

Any trading strategy is selected individually. Most novice traders use a ready-made technique. For many years of existence of "Forex", and the market itself as a whole, a large number of different strategies have been developed. Therefore, it is very difficult for a beginner at the initial stage to decide on the desired method. All strategies have certain parameters and are used depending on the requirements that the trader makes of them, as well as on the market situation. There are the following vehicle categories:

- Non-indicator strategies based on candles or bars. Such trading methods use candlestick analysis, which is based on various candlestick configurations and patterns.

- Indicator, using various technical indicators in their characteristics.

Strategies are also selected depending on the state of the market. If it is calm or is in the consolidation zone, then flat techniques are used. And if there is a good trend movement in the market, then an appropriate trading strategy is selected. During the release of important economic news, a certain method is also selected. Even special trading strategies have been developed to work on the news.

Strategy development

Since in the future the trader will have to work according to this method, it is necessary to select and develop a strategy that would give good positive results. Be sure to take into account all factors, otherwise it will not bring the expected results.

The development of a trading strategy is based on the selected tasks. Each novice trader must determine the necessary parameters for himself, as well as clearly and clearly know what results he wants to achieve, how quickly, for what purposes, and be sure to take into account the state of the market. You can not use, remake and develop a flat strategy for large impulse movements in the market. And vice versa. And also, if a trader wants to quickly overclock hisdeposit, it is not recommended to use a strategy that is designed for classics. It’s just that in this case, the receipt of regular profits is generally questioned, and if it concerns the overclocking of the deposit, then the classical method is completely unsuitable for this. Therefore, the highest priority for a trader during the development of a trading method is goals and expected results.

TS Testing: Analysis

Let's say a novice trader has chosen for himself the method of work he needs. In the system he chose, all parameters were taken into account and goals were set. Now we need to analyze the performance of the new method. Such an analysis of trading strategies is carried out using testing. It can be carried out in two ways: on history and using a special vehicle tester for such purposes.

How to analyze the performance of a strategy on history? You need to select a specific time interval, set all the parameters that are used with the selected vehicle, and see what results it will give. That is, how many losing trades, how many profitable ones, what is the total amount (number of points), maximum drawdown, maximum profit and other parameters.

But what about the analysis of the TS performance in the strategy tester? It is carried out in a similar way. You also need to set a time interval, "run" the vehicle in the tester and analyze the results.

And the last, final stage: you need to analyze the TS on the practice account in real time. To do this, you can use a demo account, which is freeprovided by the broker for its clients. And after the trader receives certain results, depending on whether they suit him or not, you can start trading on a real account or refine your system.

Best Forex Trading Strategies

Usually, before starting to work in the financial market, each trader chooses for himself several TS with different parameters. These systems can be both ready-made and self-developed. Before applying the TS on his real account, the trader tests and analyzes them. Then he conducts a selection, choosing the best strategies. Good systems have a large percentage of profitable indicators, minimal drawdown or none. And since the foreign exchange market is constantly changing and does not stand in one place, that is, it is in constant motion, then different methods are selected, depending on its behavior.

For example, in a quiet, calm market, when prices are in the consolidation zone and practically trample on the same level, TSs are used that are designed specifically for such a movement, that is, in a flat. And if the market has a pronounced trend or strong impulse changes in indicators, then the trader works with the appropriate system. The best technique for a beginner will be such a TS, which he will understand well and know the entry and exit points, that is, when to open a trade and when to close it. Only with clear and clear signals can an analyticalreview the market situation, conduct a trading operation on time and make a profit. It is desirable for novice traders even at the very beginning of work to have several TS for different variations that can occur on Forex.

The easiest trading technique

Of course, it is best that a trader's trading strategy is not based on contradictions. It happens that the TS incorporates several technical indicators. And since they have different parameters and properties, their values may differ from each other. It turns out the contradiction of indicators. An experienced trader who has been trading in the foreign exchange market for a long time will easily understand how to act in this situation, but a beginner can get confused. Therefore, a trading strategy for a beginner should be quite simple, understandable and contain a minimum of indicators. An excess of technical instruments on the chart not only leads to a contradiction between them, but also because of them, the review of candles is limited, and they are really the main ones, as they show price changes.

TS based on moving averages

AO is a very simple "forex" indicator. On the basis of AO, a large number of different strategies have been created. An example of a trading strategy.

You only need 2 moving averages with indicators that can be selected individually, in this case, AO8 and AO13 are used. Entering the market: when moving averages cross, if they are directed upwards, you need to open a buy order, and if AOs have a downward direction - sell. Exit, closing the order: when they cross in the oppositedirection. Interestingly, this is a very simple vehicle, quite "old", but nevertheless effective.

Which strategy to choose for a beginner

Whatever method of trading a novice trader chooses, the most important thing is that he himself understands how the TS works, the simpler its conditions, the better. Before you start trading on a real account, you must definitely test it on a training account, and then analyze and evaluate the indicators of the methodology. The choice always remains with the trader, and if he takes into account all the tips that were given above, then the chances of choosing a profitable trading strategy for himself increase.