TOP FIVE FOREX TRADING STRATEGIES

Forex trading strategies are those made by traders by themselves or already available on the internet. These strategies include the chart analysis, technical analysis, or news-based events. There are a number of best forex trading strategies used by traders. We will discuss the top five here and these are the following:

Bolly Band Bounce

Bolly Band Bounce trade means to keep an eye upon the prices for a short period of time, a limit is applied in the form of the Bollinger bands.  Bollinger bands exhibit the elasticity of rubber bands because when the price approaches outer band, resistance encounters by price and snapped back towards the opposite band. When the market is in range, this behavior is encounter by trading at the outer bands. It would be very effective for short-term scalps. However, this behavior is not effective in sharply trending markets.

To know the price is in range, Bollinger bands are helpful. Check out if the price is on which side of the mid-band. If the price is consistently staying, above the mid-band then we are in an uptrend and if the price is staying lower, then the price is trending down. Then comes the mechanics of entry stop loss and take profit limits. In this strategy, the idea is to enter as soon as the signal is confirm in the market, with a tight stop loss and then take the profit at the opposite Bollinger band. After this, move stop loss to break even immediately. If you will not do this, price bouncing will be caught you in the mid-band at Bollinger, retracing to take out your stop.

In this strategy, you would have to use your own judgment to know, when to move to break even or else you will caught in normal retracement even when the price would be in the direction you wished.

Fibonacci Trading Strategy

The Fibonacci trading strategy is to identify where one can put orders for the market entry, earn a profit and stop the loss. Fibonacci was an Italian mathematician, who hundreds of years ago explained the correlation between nature and numbers. These numbers are 0, 1, 1, 2, 3, 5, 8, 13 and go to infinity. Fibonacci trading strategy give clear understanding to traders that stocks moves in waves rather than moving in a linear fashion. One can must have knowledge about Fibonacci retracement that are 38.2% and 61.8% whether you are using them or not in trading. Traders use retracement to make low risk entries. Moreover, there are three Fibonacci trading strategies e.g., pullback trades, breakout trades, and trading with indicators. There is 1.618 golden ration in it, which is most important in orbital mechanics where more than one mass bodies are involved. This ratio is get by dividing a line into two equal parts in which longer side is divide by a smaller side.

Pop ‘n’ Stop Trade

Another method of forex trading is pop ‘n’ stop trade. If you are searching a good trading strategy, pop ‘n’ stop will prove to be very effective and interesting. Traders impatiently wait for a trade breakout from a tight range. They believe that they can make a handsome amount of money if they succeeded in identifying the price movement because prices move like a bouncing ball from here and there, after the breakout from the tight range. However, even keeping a very close eye on the movement sometimes traders missed out the prices in a particular situation. In this case, the result is so disappointed for them. Even some traders missed the great prices repeatedly. Missed moves in the prices make a great loss for traders.  The pop ‘n’ stop strategy is comprised of trading indicators and price actions e.g.  Harami candle pattern, polarity indicators, bar candle, and resistant levels. Harami is the one that can help to identify both bearish and bullish breakouts. In this strategy, prices popped out eventually and then stopped temporarily before restart its upward move. The thing to remember is the pop n stop is a risky strategy because sharp moves creates gaps that are still need to fill.

London Hammer trade

As one hears about London hammer, it seems to be difficult by its name but it is just a piece of cake in reality. It revolves around the London trading market. The market opening time is considered golden time because most of the profit generation start at this time. They decide what will be the normal and how the market goes. The best example of London hammer trading is commodity trading where gold is the most valuable thing and trade in the London market. In this strategy, investments go up high against the expectations. Traders have to buy or sell things with the profit loss ratio of 2:1. To make a better use of this London hammer strategy one must have a proper grip on candlestick strategy.  If you make a good use of this strategy, the cost will change notably within moments. However, do not forget about the risk because it is there and you need to be alert.

The Bladerunner Reversal

The Bladerunner Reversal is one of the best EMA crossover strategy. Traders used this strategy to generate more profits. The Bladerunner Reversal is itself a variation of Bladerunner. It makes the use of Forex Polarity indicator, which further consists of 20 EMA and Bollinger mid-band. Therefore, you can use both of them together when you do not have access to polarity indicator in order to trade Bladerunner reversal.

Bladerunner reversal is a trade crossover of those two different indicators that serve as the basis of Forex Polarity indicator. Bladerunner indicates this cross in the shape of contracting and expanding yellow band whereas Polarity indicator does not show this.

In Bladerunner reversal pattern after breaking out of a channel, the price trades for sometimes with full of its strength. Afterward, the price stops, reverses its direction and then move through the Polarity indicator before the change comes back and from other directions tests the Polarity indicator again.

There is a difference between Bluerunner and Bluerunner reversal. Bluerunner waits for the trend to confirm and after confirmation, it trades bounces from the Polarity indicator in the direction of that trend. Whereas, Bluerunner reversal does not comes when the only trend is confirmed. Bluerunner reversal comes when only the trend is confirmed and the price reverses to close on the opposite side of the Polarity indicator. To cope with the price that is not trending for a significant period, a good strategy is to apply Bluerunner and Bluerunner reversal during the same session.