Best Trading Strategies

Did you know that having an effective Forex strategy to help you navigate the financial markets can greatly improve your trading performance and decision making over time?

But what makes a trading strategy effective? More importantly, how can you stay informed of the best Forex strategies for this year?

In this article we will see:

    • Tools to use in Forex strategies
    • Best markets to trade

 

  • Trading strategies according to the trend
  • Trading strategies according to the time frame:
  • Scalping
  • Day Trading
  • Swing trading
  • Positional trading
  • Seasonal trading
  • Investment strategies
  • Trading strategies 2019 according to the instrument traded: Forex, Stocks, CFDs, Commodities, Indices
  • Best trading platforms to trade

Contents

Best Forex & CFDs Strategy, Does It Exist?

Surely as a beginner trader and not so beginner, you are looking for the super winning Forex strategy that results in each and every one of your operations. We are going to save you time, this super strategy does not exist!

First, you must analyze your profile as an investor, that is, if you like risk or on the contrary you run away from it and based on this, determine a set of strategies that can work and we say they can because:

The success of a trading strategy is never guaranteed

What may work for someone else may be a disaster for you. On the contrary, the Forex strategy that has been discarded by others, may be the best for you.

Therefore, experimentation is necessary to discover the Forex strategies that work. Vice versa, you can discard those that don’t work for you. Even after much experimentation, the market may not go as you thought and your strategy, still studied and analyzed, may not give the expected results.

Before we begin, let’s look at a brief introduction to explain what a Forex Trading strategy is in general.

What is an FX and CFD Trading Strategy

The best Forex Trading strategy includes a set of analysis tools that currency traders use to determine their buy or sell decisions at a specific time.

They are used to streamline the process of analyzing this information by creating a set of rules, or a methodology, for making a trading decision.

After all, the myriad of trading techniques and strategic methods can be overwhelming for any trader, no matter how experienced they are.

Components of an effective trading strategy can include:

  • A step-by-step process for verifying critical news announcements
  • An overview and a short-term picture of the market trend
  • Specific trading indicators that can aid in buying and selling decisions
  • Rules for the size of operations
  • Global portfolio risk management

The individual components will vary depending on the types of strategic methods and the style the trader is using, as you will discover in the strategy examples section later in this article.

In general, traders incorporate various trading signals into their best trading strategies that will help them make different buying or selling decisions.

Therefore, at this point, we cannot claim that there is a particular type of trading strategy that is the best option. There are several classes of Forex strategies that provide trading alternatives.

Remember, although there are a large number of trading strategies, you must choose a strategy that suits your needs and purposes. The trading strategy should not be too complex to understand or follow. A strategy must be simple and applicable manually or automatically.

In 2012, Bruno Iksil, was nicknamed ” The London Whale “, because he lost no less than 6.2 billion euros by using an overly complex trading strategy involving derivatives.

Trading Strategy – Tools

There are two large groups of trading tools in which most of the indicators that exist are classified. Technical and fundamental tools.

1) Technical tools

The technical analysis depends on the graphs and takes as its premise one of the postulates of the Dow theory : the market discounts everything.

Any factor that has an impact on supply or demand will be reflected in the price and therefore, as stated by technical analysts, it will appear on the charts.

  • Price action

As we all know, charts are made up of axes that represent time and price. Price action appears on these charts, waiting for you to interpret it, regardless of your trading style (long-term positional or short-term intraday), but it all starts with studying the charts and the price action on them.

Strategies based on candlestick patterns can be used in various markets and in different time frames, as well as being simple to understand. However, while these can be a solid basis for defining your strategy, they often lack precision to signal, and variations such as Heikin Ashi candle charts emerge.

Now that your charts have the price action plotted, let’s talk about your support structures.

The basis of price action trading lies in the observation that the market often returns to the levels where it has turned or consolidated in the past. This simply introduces the concepts of support and resistance.

The support and resistance levels are not a strict line, but a range that can have a difference of between one and several pips, depending on the time period you are working on.

In general, traders avoid trading near these support and resistance levels, as they are uncertain whether the price will rebound or break out to continue its current trend.

One of the most common trading systems (but not necessarily the most profitable Forex system) incorporates these concepts of support and resistance, looking for breakout operations.

When a breakout is confirmed with a clear close of a candle, the trader can interpret it as a signal that the market has momentum and may move in the direction of the breakout.

In addition to support and resistance levels, technical traders can use different chart patterns (such as trend channels, triangles, etc.) or techniques such as Fibonacci retracements to try and predict future price action.

It is important to keep in mind that for each trader the same chart can show different patterns, thus producing opposite signals. This shows the imperfections of this method, which is actually more of an art than a science.

  • Follow the trend

The high point of the technical analysis is the combination of the other two postulates of Dow: the market advances in trend and it does so until there are definite signs to show otherwise.

A trend is a market condition that shows price action moving in an obvious direction over an extended period of time. Something that all traders agree on is that the trend is your friend.

Financial traders are big fans of measuring and following trends, and they have a wide variety of technical indicators to support their strategies.

In fact, most of the indicators available on trading platforms, from all kinds of moving averages, the MACD and the stochastic indicator, to the more exotic ones like the Ichimoku , are designed to indicate the existence and strength of a trend.

This class of traders always buy when the market is going up and sell when the market is going down. Typically these people miss the start of the trend and never trade on tops or floors because their systems require confirmation that changes in price direction are new trends rather than reversals.

What trend traders don’t like, or their strategies, are ranged markets.

A ranging market is like a horizontal or lateral trend, with the price fluctuating and bouncing in a narrow corridor.

There are no clear trends in this market, whether bullish or bearish, and everyone waits patiently until a breakout of this channel occurs and a new trend appears.

Trend continuation strategies are the safest and possibly most profitable form of trading out there (when executed correctly, of course).

These strategies perform better when used in the long term, as trends take weeks or months to develop, and can last for years or even decades.

In theory, these strategies are relatively safe and can yield a return of between 10% and 15% per year.

2) Fundamental tools

Fundamental analysis, unlike technical analysis, focuses on the fundamental forces that influence supply and demand as the main drivers that move price.

Fundamental analysts claim that markets may misvalue a financial instrument in the short term, but that in the end this error is always “corrected.”

  • Forex fundamentals

The critical analysis born in the stock market in a à © little on which virtually no one on Wall Street bothered to trace the action of the price in graphics. Since there are no balance sheets or income statements of companies to analyze in Forex, currency traders focus on the general conditions of the economy that supports the currency that catches their attention.

The only problem is that even though countries look a lot like companies, currencies are not the same as stocks.

The financial situation of a company is directly reflected in its share price. A positive or negative performance can be identified through technical analysis, which can help predict how the stock will perform.

However, in the case of countries, a better economic performance does not always mean an appreciation of their currency.

The relative value of a currency results from a wide variety of factors including the nation’s monetary policies, economic indicators, global technological advances, international developments, and even “wow, I never would have guessed” events.

Most of the fundamental factors always remain in the category of “who knows” and are not reliable enough on their own to be the most profitable Forex system.

That said, the ingenuity of fundamental traders is that they developed some interesting strategies that are worth researching to grab ideas.

For example, news scalping is basically a strategy based on fundamental factors, as the trader has to follow the news and act accordingly.

Trading Strategy – Supports and Resistances

Support and resistance are key elements when it comes to making a good trading strategy. In a simple way, we can say that support and resistance levels represent a market’s tendency to bounce off previous highs and lows.

Support is the trend to rise from a previous low. Resistance is the tendency of the market to fall from previous highs.

This occurs because market participants tend to judge the current price against previous highs and lows.

  • What happens when the market approaches recent lows?

Quite simply, buyers will be drawn to what they see as cheap.

  • What happens when the market nears recent highs?

Sellers will be drawn to what they see as expensive, or a good place to secure a profit.

Therefore, recent highs and lows are the yardstick against which current prices are evaluated.

There is also an aspect of prophecy fulfilled at the support and resistance levels. This occurs because market participants anticipate a price reaction at those levels and act accordingly.

As a result, your actions can contribute to market behavior as expected.

However, it is important to mention 3 issues:

  • Supports and resistors are not inviolable rules, they are simply a common consequence of the natural behavior of market participants.
  • Trend following systems seek to benefit from those moments when support and resistance levels break.
  • Counter-trend trading strategies are the opposite of trend following – they seek to sell when there is a new high and buy when there is a new low.

Effective Trading Strategy – Better Markets

Before we discuss some of the different types of trading strategies that you can use, you may be thinking about which are the best markets to apply these strategies.

Since an effective trading strategy is simply a sum total of rules and conditions that help make a decision, that strategy can be tailored to the specific market that is being traded.

This is why many traders choose to employ trading strategies across a wide range of markets, including:

  • Forex
  • Actions
  • Raw Materials
  • Indices
  • Cryptocurrencies

Although there are several financial products that can be used to operate in these markets, one of the most popular methods is through the trading of CFDs or Contracts for Difference.

Using this vehicle, traders can speculate on rising and falling prices without owning the underlying asset. They also have other characteristics such as:

  • Leverage – a retail client can trade positions up to thirty times their balance. A trader who is categorized as a professional client can trade positions up to five hundred times his balance. This carries risks, since although the gains multiply, also do the losses.
  • Trade in any direction – Go long or short in a market in order to trade through different, and ever-changing, market conditions.
  • Access global markets – trade Forex, global equity markets, commodities and stock indices.

Trading CFDs is useful for most styles of trading and strategy methods that you will learn about in the next section. For now, let’s look at the different types of trading strategies that are available to you.

Trading strategies according to the trend

When it comes to Forex Trading strategies there are two main styles:

  • Trend trading
  • Trading contractendencia (o lateral)

There are also other types of less common trading strategies such as the Carry Trade strategy. This strategy tries to take advantage of interest rate spreads rather than market direction.

Let’s see them!

FX Trading Strategy – Trends

Sometimes a market breaks out of a range, moving out of resistance to start a new trend.

How does it happen?

Source: Metatrader 5, EUR USD. D1. Data as of May 2019 Note: Please note that past performance is not a reliable indicator of future results

When support breaks and the market moves to new lows, buyers wait for the new lows to set.

At the same time, there will be traders who sell in moments of panic or are forced to exit the position.

The trend continues until the sale is exhausted and buyers regain confidence that prices have reached their new low.

Trend following Forex strategies buy the market once the resistances have been broken and sell them once the levels have fallen below support. Trends can be short-term and also long-term.

Due to the magnitude of the movements involved, this type of system has the potential to be the most successful strategy in Forex Trading. Trend tracking systems use indicators to tell when a trend may have started, but there is no foolproof way of knowing the course.

And here comes the good news!

If the indicator can distinguish when there is a time with a better chance that the trend has started, the balance is in your favor. The indication that the trend may be forming is called a breakout.

A breakout is when the price moves past the highest high or the lowest low in a given number of days. For example, a 20-day break to the upside is when the price breaks the highest high of the last 20 days.

Trend following systems require a specific mindset. Due to its long duration, during which the benefits achieved may disappear when the market turns. These trading strategies can be psychologically more demanding so you can certainly benefit from a good trading plan .

When markets are volatile, trends will tend to be more camouflaged and price spins will be larger. This means that a trend-following system is the best strategy for quiet and trending Forex markets.

Following a trend can generate large profits and there are many traders who have achieved great results using these systems.

But all that glitters is not gold, since there are also some disadvantages related to these strategies:

  • They are hard to follow
  • Big trends don’t abound
  • Conditions that signify the potential start of a trend are rare.

This means that the strategy tends to generate numerous losing trades. The theory is that these losses will be offset by winning trades, which, although they may be more infrequent, are usually larger.

On several occasions you have heard the phrase: “The trend is your friend”, but perhaps we should add to this expression “until the end comes”.

The end of the trend comes when the trend fails and this can be difficult for investor psychology to accept.

One of the big problems with trend-following systems is that large amounts of capital are needed to be able to follow them effectively. This is because having a large amount of capital reduces the chances of going bankrupt for a long period in losses.

Therefore, trend strategies can be useful and easy to understand as Forex strategies for beginners, but they may not be ideal for beginners’ health.

Trend Trading Strategy – Breakout

Sometimes markets move between support and resistance bands. This is known as consolidation.

A breakout will occur when the market moves beyond the limits of its consolidation, towards new highs or lows. For this new trend to occur, a breakout must first occur.

Source: MetaTrader 5, EUR USD H4, info as of May 21, 2019. Please note that past performance is not a reliable indicator of future performance.

Therefore, breakouts are seen as potential signs that a new trend has started.

But the problem is that not all breakouts give rise to new trends. In Forex, even such a simple strategy must consider risk management , as proper risk management minimizes your losses during a false breakout.

A new high indicates the possibility that an uptrend is starting, on the other hand, a new low indicates that a downtrend is starting. So how can we get an idea of ​​the type of trend we are entering?

The length of the period can help determine the highest high or lowest low.

A breakout past the highest high or lowest low over a longer period will suggest a longer trend. A breakout in a smaller time frame will indicate a short-term trend.

In other words, Forex breakout strategies can be adjusted to react more quickly or more slowly to the formation of a trend. Reacting more quickly allows you to traverse a trend from a starting point, but it may turn out that it contains shorter-term trends.

So let’s look at a reasonably long-term breakout strategy.

  • The buy signal is when the price breaks above the 20-day high.
  • The sell signal will occur when the price breaks below the 20-day low.

This is very simple, but there is still one big drawback. That is, new highs may not result in a new uptrend, and new lows may not result in a new downtrend.

Using a stop loss can help alleviate this problem. To keep things very simple, we will use this simple rule of thumb in trading, taking a time-based approach. We will simply close our position after a certain number of days have passed.

This time-based output raises the issue that things get messy when the trend starts to unravel. Once you enter a trade, hold it for 80 days and then exit.

Remember, this is a long-term trading strategy.

If you find that these parameters do not produce enough frequent signals, you can adjust them to suit you best.

For example, you can try using hours instead of days for a shorter strategy.

Trendy FX Trading Strategy – Crossing Moving Averages

Another Forex strategy uses the simple moving average (SMA). Moving averages are a lagging indicator that uses more historical price data than most strategies and moves more slowly than the current market price.

The longer the period over which the SMA averages, the slower the SMA moves. We often use the longer SMA in conjunction with a shorter SMA.

For this simple Forex strategy, we will use a 25-day moving average as our short-term SMA and another 200-day moving average as our long-term average.

Source: MetaTrader 5, EUR USD H4, MA 25, 200. info as of May 21, 2019. Please note that past performance is not a reliable indicator of future performance.

In the graph above, the 25-day moving average is the orange line. As you can see, this line follows the real price very closely. The 200-day moving average is the green line.

How is the price movement smoothed out?

When the short moving average crosses the longer moving average, it indicates a change in trend.

  • When the short moving average moves above the long-term, it means that the most recent prices are higher than the oldest. This suggests an uptrend and is our buy signal.
  • When the short moving average moves below the long-term moving average, it suggests a downtrend and is our sell signal.

Rather than being used solely to generate Forex trading signals, moving averages are often used as confirmations of the overall trend. This means that we can combine these two strategies using the confirmation aspect of our mean to make our breakout signals more effective.

With this combined strategy, we rule out breakout signals that do not coincide with the general trend indicated by our moving averages.

An example, if we receive a buy signal for our breakout and we see if the short moving average is above the long moving average, we can place our order. Otherwise, we will have to wait.

Trendy FX Trading Strategy – Donchian.

The Donchian Channels were invented by Richard Donchian futures trader and are indicators of trends that are being established.

The parameters of the Donchian channel can be modified as you see fit, but for this example we will see the 20-day break.

Basically, a Donchian channel breakout suggests one of two things:

  • Buy if the market price exceeds the high of the last 20 days.
  • Sell ​​if the market price exceeds the minimum of the last 20 days.

Source: MetaTrader 5, EUR USD daily. 22 March 2019. Note Keep in mind that past performance is not a reliable indicator of future results

This is not all! There is another rule for Trading when the market situation is more favorable for the system. This rule is designed to filter out breakouts that go against the long-term trend.

In other words, you look at the moving average for the last 25 and the last 300 days. The direction of the shortest moving average determines the direction that is allowed.

The rule states that you can only go in:

  • Short if the moving average of the last 25 days is less than the moving average of the last 300 days.
  • Long if the moving average of the last 25 days is greater than the moving average of the last 300 days.

Exit from positions is similar to entry but using a breakout from the last 10 days. This means that if you open a long position and the market moves below the low of the last 10 days, you will want to sell to exit your position and vice versa.

Sideways Forex Trading Strategies

Counter-trend or sideways Forex strategies are based on the fact that most breakouts do not develop on long-term trends. Therefore, the Trader using this simple Forex strategy seeks to gain an advantage over the previous trend that establishes the minimum and maximum.

In theory, the countertrend strategy is the best Forex strategy to increase self-confidence as it has a very high success rate.

However, it is important to mention that the reins must be well held in risk management. These Forex strategies are based on the support and resistance levels being maintained. However, there is a danger of great losses when these levels are broken.

Again, the graph that we presented in the previous section may be useful.

A constant monitoring of the market will be a good idea. The market state that best suits this strategy is stable and volatile. This type of market situation offers good price spins that are within a range.

Keep in mind, that on the contrary the market can change state. For example, a calm and stable market could start a trend while it is stable and then become volatile as the trend unfolds.

How the state of the market will change is unknown. You should be looking for evidence of what the current state is to see if it suits your trading style.

These two Forex strategies (trend and counter) are intended to benefit from recognizing and exploiting price patterns. When it comes to price patterns, the most important concepts are support and resistance.

In both cases, leverage in Forex allows greater exposure to the market. Before considering leverage, please make sure you understand your risk.

Trading FX Strategy – Carry Trade

It is very important to know this strategy, since it is a very widespread trading strategy among the most professional traders, so it is not purely a Forex strategy for beginners. Best of all, it is easy to implement and easy to understand.

The essence of the carry trade is trying to profit from the difference between the returns of two currencies. To understand this, let’s take as an example someone who changes currency that physically.

Imagine that an investor borrows a sum of Japanese yen. Because the benchmark Japanese interest rate is extremely low (at the time of this writing, the effective rate is zero), the cost of maintaining this debt is negligible.

Once these yen are obtained, the investor changes the yen into Canadian dollars and invests the product in a government bond that yields 0.6%. The interest received on the bond must exceed the cost of financing the debt from the yen obtained on loan.

But there is a downside, the currency risk involved in this transaction. If during this operation the yen appreciates enough against the Canadian dollar, the investor will end up losing money. The same principles apply when trading Forex.

If you buy a currency pair where the first denomination (base) currency has a high enough interest rate relative to the second (quoted) currency, your account will receive positive swap rate funds.

The amount you get is correlated to the amount of currency purchased, so leverage is helpful if the strategy is worth it. However, as noted above, there is an inherent risk that this trade will end on the wrong side due to a movement in the currency pair. Therefore, it is important to carefully select the correct currencies.

Inertia is your friend with this strategy where you are looking for a currency pair with low volatility. Furthermore, it is also important to keep in mind that leverage will end up increasing losses if you make a mistake.

The Japanese yen has long been famous for being used as a financing currency, as Japanese interest rates have been low for a long time and the currency is perceived as stable.

This strategy works well in times of increasing risk appetite, as investors tend to seek higher-yielding assets. Actually, the action of traders who implement this strategy can support it because the more people use this strategy, the greater the selling pressure on the funding currency.

Although this Forex strategy has been successful, there is currently a problem, because the global low interest environment has reduced the spreads in different interest rates during the credit crisis, so as the crisis progressed, capital funds flowed into the refuge of the Japanese yen.

If the Fed continues with its intention to tighten monetary policy in the future, we may possibly find an opportunity to return to the Carry trade strategy.

Trading strategies according to time frame

There are multiple types of trading techniques and strategy methods to choose from. While the number of Forex strategies may seem daunting, it is also one of the reasons people of all walks of life participate in financial markets: there is usually something for everyone!

Whether you are trading short-term, long-term or investing, most of the techniques and methods you use will fall under one of the following types of trading strategy:

1. Estrategias Trading – Scalping

First of all say that scalping is not a strategy (per se) but a very short-term type of trading.

We are going to explain how some traders enjoy spending their time watching the markets, since doing so increases their heart rate and adrenaline.

MetaTrader 5, EURUSD M1, March 2019. Note: Please note that past performance is not a reliable indicator of future results.

The type of trading that undoubtedly provides the most adrenaline rush is scalping. The underlying idea behind Scalping is to perform a large number of trades that individually generate small profits of between five and ten pips each.

Traders typically hold these positions for one to five minutes and spend the entire day monitoring the various buy / sell signals. Some have made huge profits from this approach, including Paul Rotter.

Mr. Rotter achieved Legendary Scalper status with the nickname “The Flipper” for his rapid actions in the markets. Rotter opened buy / sell positions simultaneously on the Eurex derivatives market, quickly making profits through one of these alternatives. A crucial factor in Rotter’s success was looking closely at market depth.

2. Trading Strategies – Intraday Trading

Day trading is a style in which traders buy and sell multiple assets within a single trading day, often exiting trades at the end of the day.

In fact, it is rare for active intraday traders to hold open positions overnight, much less for several days.

The most common time frames used in intraday trading strategies are:

  • four hour charts: H4
  • one hour: H1
  • thirty minutes: M30
  • fifteen minutes: M15

Many beginning traders are inclined towards day trading as they are attracted by the possibility of making profitable trades multiple times, in a single day.

While day trading can be lucrative, it is also the most difficult to master and can result in huge losses for those without sufficient experience and knowledge. In fact, it is not advisable for most to make multiple high-risk financial decisions in a short period of time, unless they have undergone significant training and conditioning.

Day Trading Strategy – How to Create It

While intraday trading is challenging, it is possible to learn techniques and practice this type of trading strategy until it is mastered. Whether it is stocks or intraday Forex trading, there are some key elements to developing the best trading strategy, such as:

  • What markets are you going to operate in? Many are focused on stocks, but an intraday trading strategy can be used in any major market. Since these types of traders perform many operations for very short-term price movements, choosing markets that offer low commissions and small spreads is essential.
  • What time frame will you focus on? There are many to choose from. You should choose a period of time that suits your availability, so that you can familiarize yourself with the way the market moves.
  • What tools will you use to enter and exit trades? When you learn how to trade intraday, there are a host of trading indicators available to you. Focus on one or two to really master how they work.
  • How much will you risk per trade? The size of the operation and risk management are very important. You should not risk too much per trade, as it is likely that you will have a series of consecutive losing positions at some point in your career as a trader.

Day Trading Strategy – Example

We will see in the graph below how the prices of a particular market behave over a two-day trading period.

Having a written intraday trading strategy is very important, as traders are going to face many random price movements that form multiple market conditions and trends (up, down, sideways). Each of these movements requires different trading techniques.

Trading indicators, such as moving averages, are popular for day traders, as they can be useful for differentiating from changing market conditions.

Let’s introduce a moving average on the M30 time frame price chart:

Source: Admiral Markets MT5 Supreme Edition – M30 AUDUSD Chart – Data range: June 5, 2019 to June 13, 2019 – Performed on June 13, 2019. Please note that past performance is not a reliable indicator of future results.

The blue line represents a twenty-period moving average of the closing price of the previous twenty candles. When creating an intraday trading strategy, the trader can use it to create a rule or condition to trade:

  • Rule 1: When the price is above the moving average, there would be a long opportunity to buy or trade.
  • Rule 2: When the price is below the moving average, you could focus your attention on short or sell operations.

These two simple rules can help streamline and focus the decision-making process for day traders. The number of rules within an effective Forex strategy will vary.

In this example, the moving average has helped filter the direction.

We will explain other variants of moving average trading strategies later, but for now, let’s focus on what swing trading is – the second type of trading strategy depending on the time frame.

3. Estrategias Trading – Swing trading

What is swing trading? Swing Trading is a type of trading strategy by which traders buy and sell securities with the purpose of holding them for several days and, in some cases, weeks.

Swing traders, also known as trend follower traders, often use the daily chart to enter trades that are in line with the general trend of the market.

Some swing trading strategies only use the technical analysis of a price chart to make trading decisions. However, it is common for these types of trading strategies to also use fundamental information, or multi-time frame analysis, as more detail is needed to help keep trades open for several days.

Swing Trading Strategy – Example

One of the most popular techniques for swing trading is the use of trading indicators. There are many different types of indicators on the market and they all have advantages and disadvantages. What are the best indicators for a swing trading strategy? Many investors will use the Stochastic, MACD or RSI to identify indications that the price will continue to trend or change direction.

Ultimately, the best indicators for swing trading are going to be the ones you’ve tried and learned to familiarize yourself with. Let’s look at an example of a swing trading chart:

Source: Admiral Markets MT5 Supreme Edition – Chart D1, CFD S & P500 – Data Range: September 25, 2018 to June 13, 2019 – Performed June 13, 2019. Please note that past performance is not a reliable indicator of future results.

Most charts with a swing trading strategy have three components:

  • Daily chart bars, or candles. This means that each bar, or candle, represents the value of a trading day.
  • A trend filter. In the chart in the example above, a fifty-period moving average is used as a trend filter and is reflected by the wavy red line moving through the price candles.
  • An overbought and oversold indicator. In the chart above, a stochastic oscillator is used to identify overbought and oversold conditions and is at the bottom of the chart.

Since a trading strategy is simply a methodology to aid a trader’s decision-making process, it can be done using the three indicator components above. For example:

  • Rule 1: When the price is above the moving average, there are long or buy opportunities. When the market is below the moving average, the general rule is to go short, or sell. But this rule is not infallible.
  • Rule 2: Enter a buy trade only if the stochastic is below 20, as this represents oversold territory. Only enter a sell position if the Stochastic Oscillator is above 80, as this represents overbought territory.

Using these two basic rules would help traders identify the entry levels in the blue rectangles found in the chart below:

Source: Admiral Markets MT5 Supreme Edition – Chart D1, CFD S & P500 – Data Range: September 25, 2018 to June 13, 2019 – Performed June 13, 2019. Please note that past performance is not a reliable indicator of future results.

These simple rules can serve as a starting point to help the trader trade with the trend and timing of their market entry. Of course, proper swing trading strategies will include additional rules to address specific candlestick patterns, or support and resistance levels for entry and stop loss price placement, as well as analysis of longer time frames. to identify take profit levels, as swing traders intend to hold trades for several days or more.

4. Trading Strategies – Positional Trading

It is very difficult to determine which trading strategy can be the most successful. However, positional or long-term trading can be a potentially profitable strategy for the Forex market.

The positional trading strategy involves holding long-term positions, usually between a month and a year. However, it requires a long-term plan and the ability to predict the future direction of the market.

A position trader typically uses a combination of daily, weekly, and monthly charts, along with some kind of fundamental analysis, in their trading decisions.

Essentially, these are active investors, as they are less concerned about short-term fluctuations in the market and seek to maintain long-term operations.

The key focus for a position trader is the risk reward of a trade. As a general rule, as a position trader is looking to hold trades for several weeks or months, they often have many small-size losing trades before they have a large winning trade.

This allows the trader to risk small amounts per trade, in order to increase the frequency of the number of trades performed so that they can diversify their portfolio.

For example, speculators like George Soros were betting heavily on the pound in 1992. They were skeptical of the UK’s ability to maintain fixed exchange rates at the time. The country pulled the pound out of the ERM on September 22, 1992, and Soros made more than 1 billion on the deal.

If you are looking for a more practical example of long-term currency strategies, open a long position in GBP / USD, based on the belief that the currency pair will continue to rise after the upcoming British elections. Once you have found out how the currency pair moves after the elections, you can either close the position or keep it open.

Remember that if you trade GBP / USD, you should consider economic events not only in the UK but also in the US. Conduct a thorough analysis of the economies of the two currencies and be sure to assess the likelihood of unforeseen events.

This information is all you need to develop a long-term Forex trading strategy, but more training is always a good idea.

Positional Trading Strategy – Tips

While everyone has a different approach to trading, there are some general guidelines that can be applied to most positional traders. These guidelines are based primarily on risk management and the inherent nature of the Forex market.

Let’s see how you could improve your trading strategies

  • Use little leverage

When doing positional trading, it is advisable to trade with low leverage, or no leverage.

One of the biggest considerations in long-term forex trading is making sure that you can easily sustain any intraday or even intraweek volatility.

Since a currency pair can easily move a few hundred pips in a day, you must be sure that these price fluctuations do not trigger the stop loss.

Keep in mind:

  • the amount of money you can afford to lose, remember that you should only operate with risk capital;
  • the amount of leverage that gives you the best risk-reward ratio.
  • Pay attention to swaps

While long-term Forex trading can generate promising income, what really matters is profit.

Pay close attention to swaps,  the fee charged to hold a position overnight. Swaps can sometimes be positive. But in many cases, they will be negative regardless of direction, so assessing your expenses is crucial to making long-term Forex strategies profitable.

In some cases, you can use a strategy where the profit is small, but the Swap is favorable for you.

  • Effort vs. return ratio

Remember that even with the best strategy, you may not reach your profit target. This can happen easily if you use very little leverage. If you only trade a small amount of capital, you should expect commensurate returns.

Because of this, always consider the amount of time spent in trading compared to the monetary returns received.

In most cases, you must use relatively large amounts of capital to make the effort vs. return ratio profitable.

A very good way to get an idea of ​​what you would receive for your time without risking your capital is to open a demo account. If you don’t have your demo account yet, click on the image below.

  • High long-term volatility

Since you will have to pay swap every night that you keep the trade open, you will generally have to look for pairs that have considerably abrupt price movements in the following months. Otherwise, if you make a modest profit, it can turn into a loss in the end as the cost of the swap can exceed this amount. To do this, we recommend looking for a currency pair in which at least one of them can be highly influenced by:

  • important political events
  • important economic events in the future.
  • Low volatility in the short term

If, as we talked about in the previous point, in the long term you are interested in having high volatility, in the short term we are interested in low volatility, since if you opt for positional trading, you will not want to close your orders in just a few days due to possible sudden market movements.

Positional Trading Strategy – Example

Most positioning strategy charts have three main components:

Source: Admiral Markets MT5 Supreme Edition – Amazon, daily chart – Data range: December 1, 2017 to June 14, 2019 – Taken on June 14, 2019. Please note that past performance is not an indicator Reliable future results.

  • Daily or superior time frame (weekly or monthly graph).
  • A trend filter. In the chart in the previous example, a hundred-period moving average is used as a trend filter and is indicated by the red wavy line moving across the chart.
  • A trend reversal momentum indicator. In the example chart above, a MACD oscillator is used to identify the moment of change and is at the bottom of the chart.

As trading strategies are simply a set of rules and conditions to aid in a trader’s decision-making process, it can be done using the three components listed above. For example:

  • Rule 1: When the price is above the moving average, there will be buying opportunities. When the market is trading below the moving average, the best option would be to go short.
  • Rule 2: Enter a long-term trade only if the MACD is above 0, as this represents bullish momentum. Only enter a short position if the MACD oscillator is below 0, as this represents a downtrend.

In the chart above, the period in which both rules are met – the price above the hundred moving average and the MACD oscillator above 0 – also represent the longest trend period.

Of course, trading still needs to find the right time to execute the trade and even if this is done correctly, the momentum could turn in the opposite direction, resulting in a loss of the trade.

However, it is these long-term trending conditions that a position trader tries to identify for trading purposes.

5. Trading Strategies – Algorithmic Trading

Algorithmic trading is a method in which the trader uses computer programs to enter and exit trades. The trader will encode a set of rules and conditions for the computer program to act accordingly.

Algorithmic trading is also known as algo trading, automatic trading, black-box trading, or robot trading.

Most of the Forex strategies somewhat try to take advantage of very small price movements but with high frequency. Many beginning traders are attracted to the possibility of having algorithmic trading strategies entering and exiting trades without being aware of the market.

Unfortunately, the lure of wealth in algorithmic trading lends itself to many Forex scams , so be careful.

While it is true that there are more failed robot trading strategies than successful trading strategies, there are a number of traders who manage to harness the power of algorithmic trading over traditional and human trading.

Many traders use investment algorithms, or stock market algorithms, to help search for certain fundamental or technical conditions that are part of their trading strategies.

In effect, the algorithm acts as a scanner for potential markets to focus on. The trader can then focus on analyzing the rest of the chart, using his own Forex strategy methods.

6. Trading Strategies – Seasonal Trading

Seasonal trading involves trading with the possibility of a repeatable trend year after year. Many markets often show us seasonal characteristics due to repeatable patterns over time, government economic announcements, and corporate earnings.

A seasonal trader would use these seasonal patterns as a statistical advantage in his trade selection. Therefore, while seasonal trading is not a buy or sell timing system, it can give the trader the broader context he needs within his Forex strategies and strategy methods.

Seasonal Trading Strategies – Investing in Stocks

One of the most popular types of seasonal investment strategies is part of a popular stock trading strategy. There is an old saying in trading, ‘sell in May and go’. This saying represents the typical seasonal weakness that the stock market experiences during the summer months, between May and October.

According to the Financial Analyst Journal in 2013, a study that looked at this phenomenon found that it did exist between 1998 and 2012, with higher equity returns in the November to April period than in the May to October period. However, this does not necessarily mean that the summer months were generally negative.

However, the observation also occurs in another popular seasonal stock trading strategy, the “Santa Claus Rally.” This is the tendency of the stock markets to recover during the last five trading days of the year and the first two days of the new year.

It is important to remember that seasonal trading only provides an additional advantage to a trading strategy. A seasonal trader would also examine other indicators and tools to identify markets that offer the best clarity for trading and that are never based solely on one measurement of analysis.

The best Trading tool is your training, at Admiral Markets we make your training our bastion, sign up for our free webinars!

7. Trading Strategies – Investment Strategies

Investment strategies and trading strategies can have many similarities but they have one big difference. Investment strategies are designed for investors to hold long-term positions, while trading strategies are designed to execute more short-term positions.

Most investment strategies are designed as a strategy for investing in stocks, since buying profitable companies can, in theory, have unlimited upside potential.

When buying shares in a physical company, the downside is not unlimited. However, if the company files for bankruptcy, it may mean that the investor will lose his entire investment.

When investors are formulating their rules or conditions for their investment strategies, it is common to try to replicate the metrics of prominent companies such as Amazon or Facebook. However, while this is not an easy task, there are many other companies in which investors try to position themselves according to specific investment styles, such as:

  • Growth Investment. Strategic approaches that focus on investing for growth aim to identify the stocks that have the best “growth” prospects. In general terms, this means identifying companies that are in the mature phase of their economic cycle. For example, technology stocks attract many growth-based investors, as these types of companies often go public to raise capital, in order to further mature the company.
  • Value investment. Strategic methods that focus on value investing aim to identify the stocks that have the best value for money. Growth stocks are often priced high, as they offer the best prospects for the future. Value-based stocks are companies that typically trade at a discount due to recent negative news announcements or poor management. Value investors will look for changes in company circumstances and invest in the history of the company’s turnaround.

If you are considering investing in the stock market to build your portfolio, you need to have access to the best products available. One such product is the Invest.MT5 account.

Invest.MT5 lets you invest in stocks and ETFs on 15 of the world’s largest stock exchanges with the MetaTrader 5 trading platform. Other benefits include free real-time market data, premium market updates, zero fees for account maintenance, low transaction fees and dividend payments. Click the banner below to get started!

Now that you are familiar with the seven main types of strategy, depending on the time frame, we can see the trading strategies for this year based on the asset to be traded, forex, stocks, commodities, indices and CFDs.

Trading strategies 2019 according to the instrument

In this section, you will find a variety of trading strategies for different markets. It is important to remember that an effective trading strategy is designed to streamline the market information process by creating a set of rules, or methodology, for making an operational decision.

Most beginning traders believe that an effective trading strategy is one that wins 100% of the time and will also spend most of their waking hours trying to find a Holy Grail system.

Although some websites will market these “Holy Grail systems” to the untrained, it is worth remembering that they simply do not exist.

A trading strategy with sound risk management principles can give a trader an advantage, over time. However, keep in mind that there will be winning and losing trades. After all, anything can happen in the market at any time, it is impossible to control it.

The following trading strategies are designed to demonstrate the different possibilities available to traders, as well as to act as a starting point for creating a more comprehensive and detailed set of rules.

Let’s get started!

Trading Strategies – Forex Strategies

The forex market is ideal for almost all types of trading strategy, such as day trading, swing trading, algorithmic trading, and much more.

This is due to the fact that the Forex market is open 24 hours a day, five days a week, which makes it one of the most liquid markets available to trade.

Estrategia Forex EUR/USD

Since the forex market is open from Monday to Friday, instruments such as EUR / USD can show multiple types of market conditions in a short period of time, such as an uptrend, a downtrend and a lateral range. From the market.

This is the reason why some traders use Bollinger bands in their EUR / USD Forex strategy.

Bollinger bands are used to identify markets that are calm, and often move sideways, as well as markets that are showing higher volatility and are about to trend in a certain direction.

The Bollinger band tool is made up of three lines. The midline is a 20-day simple moving average (SMA) and is used to calculate the value of the upper and lower bands. These bands are two standard deviations from the 20-day simple moving average (SMA).

Since the standard deviation is a measure of volatility, many rules around the Bollinger band focus on the movements of the upper and lower band, such as:

  • Rule 1: When the bands widen, the market is more volatile and a trend could start.
  • Rule 2: When the bands contract, the market is less volatile and could become a side market.

On the hourly chart, the EUR / USD pair shows bearish signals.

Source: Admiral Markets MT5 Supreme Edition – EURUSD, H1 chart – Data range: May 29, 2019 to June 17, 2019 – Performed on June 17, 2019. Please note that past performance is not a reliable indicator of future results.

In the chart above, the three green lines represent the Bollinger Bands indicator. The blue squares represent time periods when the Bollinger Bands are contracting. In most cases, the market price action moved in a sideways range but for different amounts of time.

There were other time periods when the market moved in a lateral range, but the Bollinger bands had not contracted, which means that the indicator can often be behind the live price.

Now let’s look at the time period that the Bollinger Bands expanded.

Source: Admiral Markets MT5 Supreme Edition – EURUSD, H1 chart – Data range: May 29, 2019 to June 17, 2019 – Performed on June 17, 2019. Please note that past performance is not a reliable indicator of future results.

In this chart, the gold squares show the times when the Bollinger Bands expanded noticeably. In most cases, price action exploded due to increased volatility and moved in a short-term trend, with some moving up and down.

As these trend-based movements offer higher price movements, using the widening Bollinger bands as a general rule of thumb in a Forex strategy may be more useful.

Since Bollinger bands measure volatility rather than trend direction, some traders add a trend filter, such as a long-term moving average, into their Bollinger Bands Forex trading strategy. This is because a moving average shows the average price of a certain number of historical candles, so it is very useful to quickly identify the general direction of the price. For example:

  • Rule 3: Only buy, or open a long trade, when the price is above the 200-period exponential moving average (200 EMA).
  • Rule 4: Only sell, or trade short, when the price is below the 200-period exponential moving average (200 EMA).

The orange line in the chart below shows the 200-period exponential moving average (200 EMA), showing the average price of the last 200 candles.

As the exponential moving average is pointing lower, it means that, on average, the price is moving lower, which helps us to quickly identify the overall trend.

The green boxes show the time periods when the Bollinger bands expanded and prices were higher, above the upper Bollinger band, and in the direction of the long-term moving average.

Source: Admiral Markets MT5 Supreme Edition – EURUSD, H1 chart – Data range: May 29, 2019 to June 17, 2019 – Performed on June 17, 2019. Please note that past performance is not a reliable indicator of future results.

While adding additional rules results in fewer trading opportunities, it has served its purpose as an effective trading strategy, which is to streamline the decision-making process for the trader.

At this stage, the trader can add more rules about the specific entry price, stop loss price, target price, and trade size to further streamline his decision-making on any current trading opportunity.

Feel like trying the strategy yourself? Admiral Markets offers professional traders the ability to trade CFDs on more than 80 currencies, including majors, minors, exotic pairs and more! Open your real trading account today by clicking the banner below!

Trading Strategies – Stock Strategies

The stock market is ideal for almost all different types of strategy, such as a swing trading strategy, position trading strategy, trend-following strategy, moving average strategy, and a price action strategy, among others.

As investors and fund managers tend to buy stocks in companies to hold them for the long term, with the expectation of a stock price appreciation, trends tend to last longer in this particular market.

Both traders and investors participate in the stock market, lending themselves to a multitude of strategies such as those listed above. While an investor will buy physical shares in a company, a trader can speculate on the price movement of a share using CFDs, which has certain advantages, such as having the ability to trade short and long.

Netflix position trading strategy

Although there are thousands of companies to trade, sticking with the companies you know and use on a daily basis can be the easiest place to start – like trading stocks in Apple , Amazon, Facebook, Tesla, or Netflix.

While there are some differences in the way the price of each stock moves, there are many more similarities. This makes the use of a stock strategy, such as a position trading strategy, negotiable in a wide range of global stocks.

Source: Admiral Markets MT5 Supreme Edition – Netflix, weekly chart – Data range: June 02, 2013 to June 17, 2019 – Released on June 17, 2019. Please note that past performance is not a reliable indicator of future results.

While the above price chart is from Netflix, it could represent any other stock price. Since a company’s stock price can often trend for quite a long time – if there is popular demand – many traders use the power of the exponential moving average to try to capitalize on trend periods.

One of the most popular ways to use the exponential moving average in a stock trading strategy is to look for a fast moving average to cross above a slow moving average, and vice versa.

A fast moving average is one that is based on a lower value of historical candles than a slow moving average, which is based on a higher value of historical candles.

The set of rules for determining the trading strategy could start with the following:

  • Rule 1: Go long when the 8-period exponential moving average crosses above the 21-period exponential moving average.
  • Rule 2: Go short when the 8 period exponential moving average crosses below the 21 exponential moving average.

In this case, the fast moving average is the 8-period moving average and the slow moving average is the 21-period moving average. Both of these numbers are Fibonacci numbers that are very popular in financial markets trading.

Let’s take a look at what this looks like on the Netflix price chart:

Netflix price chart with exponential moving average of 8 periods (green line) and exponential moving average of 21 (orange line).

Source: Admiral Markets MT5 Supreme Edition – Netflix, daily chart – Data range: March 03, 2018 to June 17, 2019 – Released on June 17, 2019. Please note that past performance is not a reliable indicator of future results.

In the chart above there are multiple occurrences of the crossover of the moving averages, both up and down. In some cases, the price followed the trend for quite some time, while in other cases it turned in the opposite direction. Let’s mark the crossovers of the exponential moving averages for a more detailed study:

Source: Admiral Markets MT5 Supreme Edition – Netflix, daily chart – Data range: March 03, 2018 to June 17, 2019 – Released on June 17, 2019. Please note that past performance is not a reliable indicator of future results.

The vertical red lines show cases where the fast moving average crosses below the slow moving average. The vertical green lines show the cases where the fast moving average crosses above the slow moving average.

What can we learn from this?

  • On the four occasions that the fast exponential moving average crossed below the slow exponential moving average, on three occasions the market held the downtrend for a long period. One problem with moving average crosses is that they can make you enter the market late and they can also give a false signal.
  • On the four occasions that the fast exponential moving average crossed above the exponential moving average of 21, the market continued to trend upward most of the time (the last being the one that lasted the least). It is in these situations where the trader tries to obtain a greater reward in relation to the risk he is taking.

The moving average crossover is essentially a position trading strategy that is well suited to a trend-following stock strategy.

While the placement of stop loss and take profit levels are discretionary, it is important to understand that this type of trading strategy will result in more losing trades than winning trades. However, the goal is for winning trades to provide us with profits that cover losses.

Therefore, it is important to use sound risk management techniques to keep your trade risk small to allow for multiple losing trades before the possibility of a large winning trade.

Trading Strategies – Strategies for trading CFDs

A CFD, or Contract for Difference, allows traders to speculate on the rise and fall of a market, without ever owning the underlying asset.

When trading CFDs there are two parties involved – the trader and the broker. The operation is as follows: when the trader opens a long or short position, he enters into an agreement with the broker to pay the difference between the opening price and the closing price of the security he is trading.

The simplicity of entering and exiting trades, compared to other products, is just one reason why many traders use CFD trading to trade a variety of markets, such as stocks, indices, commodities, bonds, ETFs and cryptocurrencies. One area that has received a lot of attention in CFD trading is going short Bitcoin.

Traditionally, to sell Bitcoin, the seller would have to borrow Bitcoins that he does not own and then sell them on the open market at the market price. The short seller would then buy those Bitcoins at a lower price in the future and his profit would be the difference from the price at which he sold them in exchange for the cost of buying them back.

With CFD trading, the process is now much simpler as the short seller can open their platform and click sell.

Bitcoin CFD Trading Strategy

Cryptocurrencies like Bitcoin tend to show large price swings due to the volatile nature of the market, which is still relatively new. This lends itself well to a multitude of strategic methods, such as swing trading, position trading, day trading, and price action trading, among others.

Price action trading is also very popular in other markets available for trading CFDs. So what is price action trading?

Essentially, it is the study of price patterns to identify what is happening now, in order to make a forecast of what might happen next.

Let’s take a look at how you can use a price action strategy to trade CFDs on Bitcoin, including going short on Bitcoin.

Source: Admiral Markets MT5 Supreme Edition – BTCUSD, daily chart – Data range: July 31, 2018 to June 17, 2019 – Performed on June 17, 2019. Please note that past performance is not a reliable indicator of future results.

The above chart of Bitcoin against the US Dollar (BTC / USD) shows a 34-period exponential moving average (34 EMA) represented in price.

As we have learned from previous trading strategies, we can use a moving average as a trend filter within our trading rules:

  • Rule 1: Go long when the price is above the 34 EMA.
  • Rule 2: Go short when the price is below EMA 34.

While the moving average gives a directional bias, the trader still needs some rules to calculate the time of a possible trade. This is where price action trading comes in handy. There are many patterns that can be used in price action trading, two of the most common are “the hammer” and “the shooting star”.

The hammer price action pattern, as shown above, is a bullish signal signifying the failure of sellers to close the market at a new low and buyers re-entering the market, to close near the maximum.

The shooting star price action pattern, as shown above, is the opposite of the hammer pattern. It is a bearish sign that means that buyers do not close the market at a new high, and sellers re-enter the market, to close near the low.

Having seen this, we can continue to develop our rules:

  • Rule 1: Go long when the price is above the 34 EMA and the hammer price action pattern is formed.
  • Rule 2: Go short when the price is below 34 EMA and the shooting star price action pattern is formed.

BTC / USD price chart highlighting shooting star price patterns (the red boxes) and hammer price patterns (the green boxes) with the 34 EMA (red line).

Source: Admiral Markets MT5 Supreme Edition – BTCUSD, daily chart – Data range: August 02, 2018 to June 17, 2019 – Performed on June 17, 2019. Please note that past performance is not a reliable indicator of future results.

The table above highlights the occurrences of both rule one and rule two. In most cases, the market continued to operate in the direction of the moving average and the suggested price action pattern.

There will be times when the trading rules you choose will be less effective, so managing risk and using a stop loss will pay off in the long run.

One of the reasons that price action trading is popular is because the price action patterns themselves give traders the opportunity to identify entry price levels and stop loss levels.

For example, the entry price could be when the market breaks the high of a hammer price pattern or the low of a shooting star price pattern.

The stop loss level could be on the other side of the price pattern with a target level of one or two times the risk in the trade – which is the entry price minus the stop loss price.

Through the use of these price action patterns and CFD trading, the trader can trade Bitcoin long and short as well, thus giving the trader opportunities in different market conditions.

Trading Strategies – Commodities

Trading commodities such as gold, silver, and oil are popular with traders as they can often trend in a directional fashion for quite some time.

All markets go through different market conditions at some point. However, commodity markets are hit hard by supply and demand problems caused by weather patterns, geopolitical tensions and economic sentiment.

The types of trading strategy that tend to be suitable for trading commodities are typically swing trading strategies, seasonal trading strategies, and position trading strategies.

Many traders combine the elements of swing trading and day trading to trade strongly trending commodity markets. This allows traders to use some of the lower time frames, such as the four hour chart, to identify the trend after the trading opportunities.

Commodity Trading Strategy – Brent Oil

MACD and RSI indicators are two popular indicators that help you find markets that are trending, markets that are about to change direction, and overbought and oversold conditions.

On the 4-hour chart, Brent oil shows both indicators:

Source: Admiral Markets MT5 Supreme Edition – BRENT, H4 chart- Data range: March 21, 2019 to June 18, 2019 – Performed on June 18, 2019. Please note that past performance is not a reliable indicator of future results.

For beginning traders, the price chart can seem random and overwhelming. This is why trading strategy is so important – it can help traders streamline the reporting and decision-making process.

So let’s start with a set of rules to process what the graph is telling us:

  • Rule 1: Go long when the MACD is above its zero line.
  • Rule 2: Go short when the MACD is below the zero line.

Essentially, the MACD acts as a broad trend filter to give the trader a directional bias. The next step is to look for clues to overbought and oversold conditions, as this could offer the best time to execute a trade.

We can use the RSI (4 period setting) to do this:

  • Rule 3: Go long when the RSI is below 30 (the lower black line in the RSI indicator window).
  • Rule 4: Go short when the RSI is above 70 (the upper black line in the RSI indicator window).

Traders can add additional rules for specific entry price levels and stop loss price levels.

For example, it might be useful to add additional rules to look for price action patterns such as the hammer and shooting star discussed in the above trading strategy. Some traders may explore the use of other indicators such as the Average True Range (ATR) to identify price levels for a stop loss. For now, let’s identify the areas where rules 1-4 above have occurred:

Source: Admiral Markets MT5 Supreme Edition – BRENT, chart H4- Data range: March 21, 2019 to June 18, 2019 – Performed June 18, 2019. Please note that past performance is not reliable indicator of future results.

In the price chart above, the green boxes represent events in which both rule one and rule three have been met; the MACD above the zero line and the RSI indicator below the 30 line.

The red boxes represent events in which both rule two and rule four have been met; the MACD below the zero line and the RSI indicator above the 70 line.

It is important to note that these conditions are best suited for very strong trending markets, as shown by the four-hour price chart above.

It is worth considering adding more rules, such as moving average crosses, to try to identify these conditions in the future. Of course, losing trades are inevitable when the market changes direction or condition. That is why it is important to use proper risk management and stop loss techniques.

Trading Strategies – Indices

Index trading can be performed by both short and long-term traders due to their ability to offer strong trending conditions at the lowest and highest time frames.

This is the reason why index trading strategies often include intraday trading strategies, position trading strategies, seasonal investment strategies, and even hedging or hedging strategies .

As global indices attract all kinds of traders, trading indicators such as the RSI indicator, MACD oscillator, Stochastic oscillator, and Bollinger bands can be quite effective to trade in the right market conditions.

We offer the ability to trade 19 different global stock indices, but for example short-term traders prefer to focus on the major global indices, including the DAX 30, FTSE 100, SP 500, NQ 100, DJI 30 and JP 225.

Now we are going to focus on the index trading strategies for the DAX 30 using day trading techniques.

Estrategia Trading DAX 30

While some traders focus on day trading stocks, many choose to use day trading techniques on stock indices due to low spreads and fees.

For example, Admiral Markets offers 24 hours of trading CFDs on the DAX30, with zero commission and tight spreads, on the world’s most popular trading platforms.

It is important to remember that this type of trading strategy involves opening multiple trades per day. This is important to know, as a higher trading frequency means that there will be a higher number of winning positions, but also losing positions. Therefore, risk management should be the cornerstone of your trading strategy.

For now, we will focus on using some of the indicators and techniques that we have used in the previous strategies.

Source: Admiral Markets MT5 Supreme Edition – DAX30, chart M5- Data range: June 14, 2019 to June 18, 2019 – Performed June 18, 2019. Please note that past performance is not a reliable indicator of future results.

The chart above shows a five-minute chart of the DAX 30 CFD over a specific time period. By using a variety of trading indicators, you can help you identify the market trend, as well as a way to time your trades. For example:

  • Rule 1: Go long when the price is above the 50 EMA + the MACD is above the zero line + the price has rejected the lower line of the Bollinger Band.
  • Rule 2: Go short when the price is below the 50 EMA + the MACD is below the zero line + the price has rejected the upper line of the Bollinger Band.

The following graphic shows some moments where rules 1 and 2 occur:

Source: Admiral Markets MT5 Supreme Edition – DAX30, chart M5- Data range: June 14, 2019 to June 18, 2019 – Performed June 18, 2019. Please note that past performance is not a reliable indicator of future results.

At the beginning of the chart, the price cycles start to move up, causing the exponential moving average and MACD to line up for long positions. Trading in the lower Bollinger band resulted in two possible trading opportunities that extended until reaching the upper Bollinger band (a useful price target when trading long).

After the middle of the graph, there are two moments where rule 2 is fulfilled (red squares). The price is below the exponential average, the MACD is below the 0 line, and the price has rejected the upper Bollinger band.

As a result, there are two sales possibilities that would have worked.

Traders can add more rules to check longer time frames and identify the best trends, as well as proper trading management and risk management techniques to maximize winning trades and minimize losing trades. .

However, before getting to that point it is important to have the right trading platform so that you can access the best trading tools for the job.

Trading Strategies – Best Trading Platform

Having the ability to access a stable and secure trading platform is essential in today’s fast-moving markets. The best trading platforms allow you to view historical price charts of the instrument you are trading, as well as provide you with the order tickets you need to place and manage your trades.

Thanks to important technological advances, you can now have your trading platform on all devices and in different versions. The trading platforms offered by Admiral Markets are:

  • MetaTrader 4
  • MetaTrader 5
  • MetaTrader WebTrader
  • MetaTrader Supreme Edition (a custom plugin for MetaTrader 4 and MetaTrader 5, created by Admiral Markets and professional trading experts)

Through the platforms mentioned above, you will be able to trade with all kinds of instruments and trading strategies, such as forex strategies, stock strategies, CFD strategies, commodity trading strategies and index strategies.

In fact, you can access more than 8000 instruments, as well as news announcements and advanced trading tools.

Most importantly, with these platforms, you have access to a large library of trading indicators that can be very helpful in following and developing different trading strategies for different markets.

Some of the world’s most popular trading indicators are available for free on all Admiral Markets trading platforms, such as:

  • RSI indicator
  • Bollinger Bands Indicator
  • MACD indicator
  • Indicador Ichimoku
  • And many more advanced trading indicators.

Admiral Markets offers professional traders the possibility to significantly improve their trading experience by powering the MetaTrader platform with MetaTrader Supreme Edition.

Get access to great additional features like advanced trading indicators like the Correlation Matrix, which allows you to compare and contrast multiple currency pairs, along with other great tools like the Mini Trader window, which allows you to trade in one smaller window as you go about your daily activities.

Forex Trading Strategies – Conclusion

To develop your best trading strategy you have to consider the following variables:

  • your risk-reward ratio;
  • your tolerance for stress;
  • how long do you want to stay each day in the financial markets.

The most important thing is that you only use techniques that you fully understand and never stop improving your Forex strategy.

In this article, we have explored a wide variety of different trading strategies and techniques. The best way to put this theory into practice is to trade in a risk-free environment so that you practice your skills, optimize your Forex strategies and learn to manage your emotions while trading.

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