subject: Forex Trading Strategy [print this page] Traders searching for an effective yet easy to understand and implement forex trading strategy might find this task is quite a struggle due to the large number of overly complicated and ineffective trading methods and systems available on the internet these days. Trading the forex market successfully does not need to be difficult or expensive; some of the best forex trading strategies are easy to use and don't cost a fortune to obtain. One such forex strategy is using support and resistance levels within a trending market to enter into high probability trades.
It is no secret that trending markets provide some of the best opportunities for entering into a profitable position. This is because there are both technical and fundamental reasons for why a given forex currency pair is in a strong trend. So, all a trader needs to do is understand the basics of how a market trends and where to enter into a strong trend. If you understand these two concepts you will have the core structure of the best forex strategy, which is clearly trading with the dominant trend direction.
When a forex currency pair is trending it inevitably ebbs and flows. For example, in a strong uptrend the market will make a big push higher and then maybe stall out for a few periods before either rotating lower or continuing higher. Sometimes a market will make strong push in the direction of the trend and then quickly rotate back to the most recent support or resistance level without much of a stall out at all. There are a few concrete rules you can follow to successfully learn the forex strategy of trading with the trend.
Rules for using the best forex trading strategy; trend trading:
First, determine whether or not there is a trend by identifying a series of higher highs and higher lows for an uptrend or a series of lower highs and lower lows for a downtrend.
If you find a market that meets the above rule and is trending nicely, you then must draw support and resistance levels on your chart. This is done by making a horizontal line across your chart at any obvious high or low point in the market where price made an obvious reversal.
Enter the trend when price either pulls back to a support point in an up trending market, or when price rotates higher into a resistance point in a down trending market. Remember that old support, once broken, will generally become new resistance, and old resistance once broken will typically become new support.
The beauty of using the forex trading strategy of trend trading is that it can be easily implemented on any time frame. You do not need to sit in front of your computer all day trading off the 30 minute chart. Instead you can choose to trade off higher time frame charts; this might mean you only look at the market once a day for a few minutes or even just a few times a week. The bottom line is that the best forex trading strategy is using simple pullbacks within trending markets to enter a position in the direction of the trend. There is no need to use a complicated forex strategy when there are simple and effective trading strategies like simple trend trading.
