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First name or full name. Probably the most straightforward trading strategy is the support and resistance play. Seasoned traders know this strategy fully well, but they give it different names.

Some names include break and retest, mirror flip, backward retest, and others. All of these names refer to one method, which this section will present in complete detail. This section will put together the elements covered in the previous areas. As you might have guessed, the trading strategy consists of three elements. While this strategy may work even with one or two elements only, you can realize a higher strike rate if all components are in place. As a result, you might find it challenging to enter the sell trade here.

However, one sell entry method you can use takes a short position when the price starts breaking down. The red candle breaking the low of the inside candle marks this event.

The previous section shows the complete picture of the most straightforward trading strategy of all. The concepts of trend and support and resistance are already familiar to virtually all traders. The area that needs further study is candlestick patterns. You can utilize any candlestick pattern that forms in the area of support and resistance.

Any such pattern is just as effective. You cannot find a setup as simple and as effective as the support and resistance play. Save my name, email, and website in this browser for the next time I comment. What's Hot. How To Prepare For A Trading Week In Forex September 23, How to Create the Best Forex Portfolio September 11, Safe and Secure Crypto Bots For Your Account June 29, Bitbot Crypto Bot Review: A High-Frequency Crypto Bot June 23, Tuesday, November Top Robots Top-Rated Top Forex Robots Top Forex Signals Top Forex Brokers Copy Trading Platforms Crypto Trading Platforms Algo Trading Strategies Reviews Forex Robots Forex Signals Copy Trading Platforms Forex Brokers Forex Guides Forex Education Forex Strategies Forex Trading Tips Crypto Guides Automated Trading.

Home » The Simplest FX Trading Strategy That Works Every Day for All Traders. Forex Strategies. By topfx July 6, No Comments 6 Mins Read. Facebook Twitter Pinterest LinkedIn Tumblr WhatsApp VKontakte Email. Share Facebook Twitter LinkedIn Pinterest Email. Trade with the trend Trading with the trend is a suggestion you often hear when trying to learn how to trade or looking for a strategy.

If price prints higher highs and higher lows, then the market is trending upward. If price makes lower highs and lower lows, then the market is trending downward. As expected we got a bullish engulfing pattern and after that price shoot like a rocket. As you already know this simple forex trading strategy is highly based on the small risk and higher reward.

Assume you had a bullish engulfing candle and you should place your entry at the closed on that candle. Next, measure the size of that bullish engulfing candle in PIPs and place your stop-loss twice that distance. For example, if the size of a bullish engulfing candle is 7 PIPs, then your stop-loss should be 14 PIPs.

According to the above chart, you can see that we got pullback trade entry as the marked bullish engulfing candle is closed. So our trade entry should be there.

Now, the size of that candlestick is 7 PIPs, therefore Stop-loss should be 14 pips which is twice that candle. This is how you place the stop loss when trading with this simple profitable forex trading strategy. We can also avoid larger drawdowns by cutting losses. If you can follow the above rules without letting your emotions affect your trading decision, you can become a profitable trader and a professional risk manager in no time.

Step 1 — If Price Break Above or Below the Engulfing Candle, We Should Close the Trade Manually. Assume you saw a bullish engulfing candlestick pattern and decided to take a long position.

After that, the price break below the trade entry and closed below the bullish engulfing candle. When this occurs, the bullish engulfing is no longer valid, and there is no reason to keep the trade open.

Therefore, we should cut our losses as soon as possible by manually closing the trade. This way we can stop a trade turn into a bigger loss. First, we can see that there is a bearish engulfing candlestick pattern that occurred after price break below the 50 SMA and this is a valid trade entry as well.

What happened after we went short? Within two candles price went up and closed above the bearish engulfing candlestick. Which mean our trade entry got invalidated. Now What? Simple, as a trader and as a Risk Manager, you should cut your losses because our trade entry got invalidated and there is no reason to keep hoping that this trade will turn in our direction.

In this step, we are giving some time period to see how the trade plays out. If the trade has the momentum to move in our favour within that time period we gave, there is no problem. Simply because the momentum is not in our favour. According to the above chart, we got a breakout entry with a strong bearish engulfing candle. This is our trade entry and we can place a short trade here. Now in this scenario price never tried to close above the entry candle. This is how you take control of your losses and keep your losses short, so that when you hit winning streaks and bigger winners you asymmetrically compound your gains.

According to the above chart, we got a strong bearish engulfing entry signal following the break of the 50 SMA. We can place a short trade there. Right after we executed a short trade, momentum began to kick in and price began to move in our favour, eventually reaching our 1R profit target.

Have a look at the red stop loss line. This is the third step on how to cut losses. At this point, there is little to no risk on our trade. We dramatically reduce the risk of our trade using these simple trading techniques.

Step 4- When the price move 1. This is where we turn our risky trade into risk-free trade by moving the stop loss to breakeven after the price reached 1. Just like the previous example, in here price first reaches to 1R level. But in here price did not stop after reaching 1R profit level, it moves down and hit our 1.

Right after that, we can move the stop-loss to breakeven and take all the risk out of the table. Now we have no risk attached to the trade, next, all we have to do is to let the trade play out and manage the trade as the price move in our favour. Managing trade is easy. You just have to trail your stop loss while the price move in your favour. As previously stated, after a trade has hit 1. The next question is how we will manage our trade and profit after the price has reached 1.

So, managing a trade is not that difficult, especially because we apply a set of rules that are simple to follow and execute. For example, when the price is 3. That way we can leave 1. Have a look at the chart below. First of all, have a look at the trade entry. This is an initial breakout entry.

This article will look at top Forex trading strategies for beginners by introducing some simple Forex trading strategies. We will guide you through three key Forex trading strategies for beginners to use today, namely - the Breakout strategy, the Moving Average Crossover strategy, and the Carry Trade strategy. The Forex market Foreign Exchange Market or FX is hugely liquid, with a vast number of participants. It is also a well-established market. As you might expect, the combination of popularity and time has resulted in professional FX traders devising countless trading strategies.

As a day trading beginner who might simply be searching for beginner's trading guides on how to learn to trade Forex, or even an intermediate FX trader seeking some useful trading strategy guides to improve their knowledge and skills, the sheer volume of trading techniques available can be daunting and confusing.

Some day trading strategies are very complicated, with a steep learning curve. So Forex beginners may find it better to start with a simple and easy Forex strategy. After all, the simpler the strategy, the easier it is to understand the underlying concepts.

There will be plenty of time to add complex actions after you have mastered the basics. Regardless of whether you adopt a simple or complex strategy, remember that your overarching mantra should always be to use what works.

New traders are generally unable to devote large amounts of time to monitoring developments. For these newcomers to Forex, simple strategies offer an effective but low-maintenance approach. The first two strategies we will show you are fairly similar because they attempt to follow trends.

The third strategy attempts to profit from interest rate differentials, rather than market direction. To put it simply, a trend is a tendency for a market to continue moving in a given overall direction. A trend-following system attempts to produce buy and sell signals that align with the formation of new trends. There are many methods designed to identify when a trend starts and ends.

Many of the simple Forex trading strategies that work have similar methods. In fact, some traders have produced outstanding track records using such systems. This means that the strategy tends to generate numerous losing trades. The theory is that these losses will be offset by more infrequent but larger winning trades.

That is a hard pill to swallow in practice. Also, once the trend breaks down, you tend to give back a healthy amount of your profit. You may have heard the phrase, "the trend is your friend", but you may not be so familiar with the full expression, which adds "until the end".

The end comes when the trend fails, and this can be very trying on a trader's psychology. One big issue with a trend-following system is that you need deep pockets to properly use it. This is because possession of a large amount of capital reduces your chances of going bust during an extended drawdown. So trend following is useful as a Forex strategy for beginners to understand, but it may not be ideal for less wealthy individuals. To learn more simple forex trading strategies for beginners, register for the FREE Forex course to sharpen your skills!

Our first strategy attempts to identify when a trend might be forming. It looks for price breakouts. Markets sometimes range between bands of support and resistance. This is known as consolidation. A breakout is when the market moves beyond the boundaries of its consolidation, to new highs or lows.

When a new trend occurs, a breakout must occur first. Breakouts are, therefore, seen as potential signals that a new trend has begun. But the trouble is, not all breakouts result in new trends. In Forex, even such simple strategies must be used with risk management. By doing so, you seek to minimise your losses during the trend break-down.

A new high indicates the possibility that an upward trend is beginning, and a new low indicates that a downward trend is beginning. The length of the period can help determine the highest high or the lowest low. A breakout beyond the highest high or the lowest low for a longer period suggests a longer trend.

A breakout for a short period suggests a short-term trend. In other words, you can tune a breakout strategy to react more quickly or more slowly to the formation of a trend. Reacting quicker allows you to ride a trend earlier in the curve, but may result in following more shorter-term trends. The buy signal is when the price breaks out above the day high, and the sell signal is when the price breaks out below the day low.

This is very simple, but there is still a major drawback. Namely, new highs may not result in a new uptrend, and new lows may not result in a new downtrend. So we are going to experience our fair share of false signals. Using a stop-loss can help to alleviate this problem. To keep things really simple, here's an extremely basic rule for exiting trades: We are going to take a time-based approach.

You simply close your position after a certain number of days have elapsed. This time-based exit side-steps the issue of things becoming tricky when the trend begins to break down. Once you enter a trade, hold it for 80 days and then exit. Remember, this is a long-term strategy.

If you find these parameters do not yield enough frequent signals, they can be adjusted to whatever suits you best.

For example, you can try using hours instead of days for a shorter strategy. Backtesting your results will give you a feel for the effectiveness of your choices. The MetaTrader Supreme Edition offers backtesting, along with a large selection of other useful tools such as automated technical analysis trading ideas and additional indicators such as a correlation matrix and sentiment indicator.

Our second Forex strategy for beginners uses a simple moving average SMA. SMA is a lagging indicator that uses older price data than most strategies, and moves more slowly than the current market price.

The longer the period over which the SMA is averaged, the slower it moves. Often, we use a longer SMA in conjunction with a shorter SMA. For this simple Forex strategy, we are going to use a day moving average as our shorter SMA, and a day moving average for the longer one. In the chart above, the period moving average is the dotted red line. You can see that it follows the actual price quite closely.

The period moving average is the dotted green line. Notice how it smooths out the price movement? When the shorter, faster SMA crosses the longer one, it indicates a change in the trend. When the short SMA moves above the longer SMA, it means newer prices are higher than older ones. This suggests a bullish trend, and this is our buy signal. When the short SMA moves below the longer SMA it suggests a bearish trend, and this is our sell signal.

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

With this combined strategy, we discard breakout signals that don't match the overall trend indicated by our moving averages. Here's an example: If we get a buy signal from our breakout, we should look to see if the short SMA is above the long SMA. If it is, we should place our trade. Otherwise, perhaps it's better to wait. Our final strategy is essential to know. It's a type of trade that is widely used by professionals too, so it is not purely a beginner Forex strategy.

Best of all, it is easy to implement and understand. The essence of the carry trade is to profit from the difference in yield between two currencies. To understand the principles involved, let's first consider someone who physically converts currency.

Imagine a trader borrows a sum of Japanese Yen. Because the benchmark Japanese interest rate is extremely low effectively zero at the time of writing , the cost of holding this debt is negligible. The trader then exchanges the yen into Canadian dollars and invests the proceeds into a government bond , which yields 0. The interest received on the bond should exceed the cost of financing the Yen debt.

Obviously, currency risk is baked into the trade. If the Yen appreciated enough against the Canadian dollar, the trader would end up losing money. The same principles apply when trading FX, but you have the convenience of it all being in one trade. If you buy a currency pair where the first-named ''base currency'' has a sufficiently high-interest rate, in relation to the second-named ''quote currency'', then your account will receive funds from the positive swap rate.

The amount yielded is correlated to the amount of currency commanded, so leverage is an aid if the strategy pays off. As noted earlier though, there is an inherent risk that you could end up on the wrong side of a move in the currency pair. It is therefore important to carefully select the right currencies.

Inertia is your friend with this strategy, and ideally, you are looking for a low-volatility FX pair. It's also important to note that leverage will end up magnifying losses if you get it wrong. The Japanese Yen has long been popular as the funding currency, because Japanese rates have been low for so long, and the currency is perceived as stable.

The strategy works well at a time of buoyant risk appetite because people tend to seek out higher-yielding assets.

When the short SMA moves below the longer SMA it suggests a bearish trend, and this is our sell signal. For this simple Forex strategy, we are going to use a day moving average as our shorter SMA, and a day moving average for the longer one. Buying Bitcoins Without KYS — Is It Possible? This article will provide traders with a detailed explanation of what Harmonic Trading Patterns are, how harmonic trading patterns are used in currency markets, as well as, exploring market harmonics, harmonic ratios, and much more! If you have any questions about this method, please leave them in the comments area.

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