On the Web, sometimes, someone writes about operative techniques. who recommends to use three moving averages  variously septate; who recommends to use a moving average along with a SAR indicator, etc. It was also written some good book about this topic. However, the mother of all currency trading strategies  does not exist. Experts say that the only real operational strategy  is the method by which you operate. Everyone has his own way of approaching the market: it depends on experience, studies, psychological attitudes and especially from the capital that you have available. The only winning weapon is the mastery of the forex tools .

When, opening the platform, youll soon realize that it is not a good day to work on a certain currency pair, and you will move your attention to a couple of other currencies, you will have made the best choice. When you will be able to establish that it is not the tool of the moving average, but that of the MACD. to give the best forecast signals in a certain day and for a certain currency pair, you will have a good chance to place profitable orders.

The best forex strategy

To build a good trading strategy  it is necessary to make a complete analysis of the technical framework of a specific currency pair.

In particular you must do:

• A graphical analysis in order to identify the significant maxima and minima, draw support and resistance, determine the trend, identify any graphical patterns.

• An analysis of the candles that make up the chart with the objective of identifying any configurations of continuation or inversion.
• An analysis of oscillators with which you work (for example, the Relative Strength Index  — RSI and the Stochastic Oscillator ).
• An analysis of two moving averages, one short term (5/8 periods) and one medium-term (14/20 periods).
• An analysis of Elliott waves. in order to identify in which wave the market is located.

For each chart considered, these five analyses should be carried out, starting from a long term before switching to medium term and, finally, to short term. The short term chart is the most important because it supplies the most precise information for day trading .

To build a good business strategy. it requires an analysis which includes three well-defined steps.

• Define the trend direction. It is necessary to identify the direction of the primary trend in order to choose between a purchasing strategy  (if the trend is bullish) or a sales strategy (if the trend is bearish).
• Establish levels of entry and exit from the market. You can choose whether to enter the market after the rupture of a level of resistance  (long), or after the breaking of a support level  (short). You can decide to enter the market before the rupture of an important level of resistance or support or on the return movement (pullback ) after the breaking of a level of resistance or support.
• Manage the position (money management ). Regarding the money management it is indispensable:

• Determine the percentage of your capital which is invested in each transaction. You must not make the mistake of investing all available capital in the same operation, but it is best to distribute the risk on different positions.
• Define an appropriate stop-loss level, i.e. the level of exit of the positions in the case where the market goes in the opposite direction compared to that hypothesized. The stop loss  must be entered just below a previous support level or slightly above a previous resistance level. If the market moves in the direction hoped for, the initial stop loss will be moved gradually to follow the movement of the market (in this case we speak of trailing-stop ).
• Have a risk/return ratio of 1/3, i.e. have a theoretical take profit that it is, in percentage points, three times the stop loss established. In this way, although 5 of 10 operations will be in loss (i.e. they will touch the stop loss level) the Profit and Loss  will still be positive.

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