Preliminary requirements
for all forex trading strategies

There are about as many forex trading strategies as cars on the road. As discussed under analyzing the best trading system, these rules apply for a good trading strategy.

The maths behind the strategy needs to be in your favor. ie win/loss ratio (accuracy), win/loss size ratio (amount won vs amount lost) and also provide sufficient opportunities to trade it.(Number of trades in a given time period).

In other words the systems profit target needs to be greater than its stop loss on each trade assuming it has a 50% accuracy. If it's accuracy is extremely high like 90%, then we can even have it's stop loss levels larger than its profit targets.

If the systems accuracy is low, like say 40% correct, it will mean that the system needs to have a higher win/loss size ratio. (ie Larger profit target vs stop loss amount).

Different system ratio's can still produce good results as long as they all work together. Its all a matter of finding the best combination of accuracy, win/loss size and trade frequency.

For a detailed discussion on maths behind the best trading system visit here.

The trading method also needs the correct money management. For more information on the importance of money management go here.

The strategy also has to fit your available time to trade and your personality. See the importance of psychology read more.

Remember for a strategy to be extremely successful we need all those three essentials to be correct. 1.Maths behind the strategy 2. Correct position sizing (money management) and 3.Be in control of our emotions such as fear and greed. (Psychology).

Experts agree to keep the strategy simple

Most trading experts agree that a good trading strategy should not be overly complicated. As a general rule they say the use of up to four indicators or triggers are about the most you will require to trade with a high degree of success.

To test different trading strategy idea's, there is software specifically created for that purpose. Read more here.

When you find some recommended trading strategies, just test them out on the simulators first and see how they perform. Usually you will find that you can combine some good strategy idea's and in effect build your very own system.

Where can you get some forex trading strategy idea's?

You can always purchase a successful strategy from someone whom has a proven track record. For example take a look at recommended systems here.

Free forex strategies

Brainyforex has compiled a list of free trading systems here.

Another excellent place to find different strategies and idea's is Edward Revy's "Forex-Strategies-Revealed.com";

Visit Edward Revy's site, www.forex-strategies-revealed.com

Edward's site has a HUGE selection of trading strategies;

  • simple strategies
  • complex strategies
  • advanced strategies
  • strategies under development

You are welcome to forward a strategy to forex-strategies-revealed.com that you are working on so as to receive free assistance and feedback for improvement. Or learn from those developing these new strategies.

Forex traders using Metatrader 4 can find excellent information about using indicators and strategies at www.forextradingmt4.com

Larry's Williams website is also a good source of (free) educational strategy content. For those whom have not heard of Larry, he has over 50 years of trading experience. His site is www.ireallytrade.com

Larry trades the Futures Market. His trading strategy involves following natural and seasonal cycles, Commitment of Traders Data (trading on the side of the commercials), identifying a low-risk price setup for entry and then staying in the market between 6 and 35 days along with using a trailing stop loss.

Having been a subscriber to Larry's free offerings, it is evident that he uses some of WD Gann's trading methodologies. Apart from his market cycle work, he also looks for specific turn dates that can only be predicted based upon prior price history. Larry tries to figure out in advance "date specific" turn dates which he offers in his paid subscription service.

Having seen some of his past forecasts (provided to free subscribers) his cycle work still needs some refining which Larry would have no problem admitting. Some of his predicted turn dates have worked out, while others have not. (PS : Isn't that normal for all market forecasters anyway?)

It is also interesting to see that Larry also first considers the "WEEKLY CHART" to look for a trade setup before looking at the daily chart. Once again, WD Gann said that WEEKLY CHARTS are the best to work with.

An interesting radio interview between Michael Covel and Larry is available on the trend following radio network.

More Forex Trading Strategies

There is also a growing collection of forex trading strategies here at brainyforex. At the free trading strategy section, free trading systems.

Forex Day Trading

Advantages Of Forex Day Trading, click here

Swing Trading Currencies

For a look at a swing trade strategy, click here

Scalping the forex markets with different forex trading strategies

How do you scalp the market for profits? What is scalping? Find out how it works here

Return home from forex trading strategies