➤ Trading Forex strategies and winning CFDs, are there? 2019

➤ Trading Forex strategies

Did you know that having an effective Forex strategy that helps you navigate the financial markets can greatly improve your trading performance and decision making over time?

But what makes a trading strategy effective? More importantly, how can you be informed of the best Forex strategies for this year?

Best Forex & CFDs strategy, is there?

Surely as a beginner trader and not so beginner, you are looking for the super winning Forex strategy that results in each and every one of your operations. We're going to save you time, this super strategy does not exist!

First you must analyze your profile as an investor, that is, if you like risk or, on the contrary, you run away from it and, depending on this, determine a set of strategies that can work and we say because:

The success of a trading strategy is never guaranteed

What can work for another can be a disaster for you. Conversely, the Forex strategy that has been discarded by others may be the best one for you.

Therefore, experimenting is necessary to discover the Forex strategies that work. Vice versa, you can discard those that do not work for you. Even after much experimentation, the market may not go as you thought and your strategy, still studied and analyzed, may not yield the expected results.

Before beginning, let's see a brief introduction to explain what a Forex Trading strategy is in general.

What is a Trading FX and CFD strategy

The best Forex Trading strategy includes a set of analysis tools used by forex traders to determine their buying or selling decisions at a specific time.

They are used to streamline the process of analyzing this information by creating a set of rules, or a methodology, to make a trading decision.

After all, the large number of trading techniques and strategic methods can be overwhelming for any trader, no matter how much experience they have.

The components of an effective trading strategy can include:

• A step-by-step process for verifying critical news announcements
• A general overview and a short-term picture of the market trend
• Specific trading indicators that can help with buying and selling decisions
• Rules for the size of operations
• Global portfolio risk management

The individual components will vary according to the types of strategic methods and style that the trader is using, as you will discover in the strategy examples section later in this article.

In general, traders incorporate various trading signals to their best trading strategies that will help them make the different buying or selling decisions.

Therefore, at this point, we can not say that there is a particular type of trading strategy that is the best option. There are several kinds of Forex strategies that provide trading alternatives.

Remember, although there are a lot of trading strategies, you must choose a strategy that suits your needs and purposes. The Trading strategy should not be difficult to understand or follow. A strategy must be simple and applicable manually or automatically.

In 2012, Bruno Iksil, was nicknamed "The London Whale", because he lost no less than 6.2 billion euros through the use of an excessively complex trading strategy involving derivatives.

Trading Strategy - Tools

There are two large groups of trading tools in which most of the indicators that exist are classified. Technical and fundamental tools.

1) Technical tools

The technical analysis depends on the graphics and takes as premise one of the postulates of the theory of Dow: the market discounted everything.

Any factor that has an impact on supply or demand will be reflected in the price and therefore, as stated by the technical analysts, this will appear in the graphs.

The action of the price

As we all know, the charts are composed of axes that represent time and price. The price action appears in these graphs, waiting for you to interpret it, regardless of your trading style (long-term positional or short-term intraday), but it all starts with the study of the graphs and the price action in they.

The strategies based on candlestick patterns can be used in several markets and in different temporalities, besides being simple to understand. However, although these may be a solid basis for defining your strategy, they often lack precision in signaling, with variations emerging such as Heikin Ashi candle graphics.

Now that your charts have plotted the price action, let's talk about your support structures.

The basis of trading with the action of the price lies in the observation that the market often returns to the levels where it was turned or consolidated in the past. This simply introduces the concepts of support and resistance.

The levels of support and resistance are not a strict line, but a range that can have a difference of between one and several pips, depending on the temporality in which you are working.

In general, traders avoid operating near these levels of supports and resistance, since they do not know with certainty if the price will rebound or break that level to continue with their current trend.

One of the most common trading systems (but not necessarily the most profitable Forex system) incorporates these concepts of supports and resistance, looking for break-up operations.

When a break is confirmed with a clear closing of a candle, the trader can interpret it as a sign that the market has momentum and can move in the direction of the break.

In addition to support and resistance levels, technical operators can use different graphic patterns (such as trend channels, triangles, etc.) or techniques such as Fibonacci retracements to try to predict future price action.

It is important that you keep in mind that for each trader the same graph can show different patterns, thus producing opposite signals. This shows the imperfections of this method, which in reality is more an art than a science.

Follow the trend

The summit of the technical analysis is the combination of the other two postulates of Dow: the market advances in trend and does so until there are definitive signs that prove otherwise.

A trend is a market condition that shows the price action moving in an obvious direction for a prolonged period of time. Something that all traders agree on is that the trend is your friend.

Financial traders are big fans of measuring and following the trend, and have a variety of technical indicators to support their strategies.

In fact, most indicators available on trading platforms, from all kinds of moving averages, the MACD and the stochastic indicator, to the more exotic ones such as Ichimoku, are designed to indicate the existence and strength of a trend.

This kind of traders always buy when the market is going up and sell when the market is going down. Normally these people miss the beginning of the trend and never operate on roofs or floors because their systems require a confirmation that changes in price direction are new trends, rather than setbacks.

What the trend traders do not like, nor their strategies, are the markets in rank.

A market in range is like a horizontal or lateral trend, with the price fluctuating and bouncing in a narrow aisle.

In this market there are no clear trends, whether bullish or bearish, and all wait patiently until there is a break in this channel and a new trend appears.

Trend continuation strategies are the safest and possibly profitable form of trading that exists (when executed correctly, of course).

These strategies have a better performance when used in the long term, since the trends take weeks or months to develop, and can last for years or even decades.

2) Fundamental tools

Start operating

Fundamental analysis, unlike technical analysis, focuses on the fundamental forces that influence supply and demand as the main drivers that drive price.

Fundamental analysts say that markets can incorrectly assess a financial instrument in the short term, but that in the end this error is always "corrected".

Fundamentals of the Forex

The fundamental analysis was born in the stock market, at a time when practically no one on Wall Street bothered to trace the price action in the charts. Since there are no balance sheets or income statements of companies to analyze in Forex, currency traders focus on the general conditions of the economy that supports the currency that catches their attention.

The only problem is that although countries are very similar to companies, currencies are not the same as stocks.

The financial situation of a company is directly reflected in the price of its stock. A positive or negative performance can be identified through technical analysis, which can help predict how the action will behave.

However, in the case of countries, a better economic performance does not always mean an appreciation of their currency.

The relative value of a currency results from a wide variety of factors including the nation's monetary policies, economic indicators, global technological advances, international developments and even "go, I never would have imagined" events.

Most of the fundamental factors always remain in the "who knows" category and are not reliable enough on their own to be the most profitable Forex system.

That said, the ingenuity of the fundamental traders lies in that they developed some interesting strategies that are worth investigating to take ideas.

For example, news scalping is basically a strategy based on fundamental factors, since the trader has to follow the news and act accordingly.

Trading Strategy - Supports and Resistances

The supports and resistances are key elements when making a good trading strategy. In a simple way we can say that the levels of supports and resistances represent the tendency of a market to bounce over previous highs and lows.

Support is the tendency to rise from a previous minimum. Resistance is the market's tendency to fall from previous highs.

This occurs because market participants tend to judge the current price against previous highs and lows.

What happens when the market approaches recent lows?
Quite simply, buyers will be attracted to what they see as cheap.

What happens when the market approaches recent highs?
Sellers will be attracted to what they see as good as expensive, or a good place to make a profit.

Therefore, recent highs and lows are the yardstick with which current prices are evaluated.

There is also an aspect of prophecy made at the levels of supports and resistances. This occurs because market participants anticipate a price reaction at those levels and act accordingly.

As a result, your actions can contribute to market behavior as expected.

However, it is important to mention 3 issues:

• Stands and resistances are not inviolable rules, they are simply a common consequence of the natural behavior of market participants.
• Trend tracking systems seek to benefit from those moments when support and resistance levels break down.
• The counter-trend trading strategy is the opposite of trend tracking - they look to sell when there is a new maximum and buy when there is a new minimum.

Effective Trading Strategy - Better markets

Before we analyze some of the different types of trading strategies that you can use, you may be thinking about which are the best markets to apply these strategies.

Given that an effective trading strategy is simply a total sum of rules and conditions that help to make a decision, that strategy can be adapted to the specific market that is being operated.

This is the reason why many traders choose to employ trading strategies across a wide range of markets, including:

• Forex
• Actions
• Raw Materials
• Indices
• Cryptocurrencies

Although there are several financial products that can be used to operate in these markets, one of the most popular methods is through the trading of CFDs or Contracts for Difference.

Using this vehicle, traders can speculate on rising and falling prices without owning the underlying asset. They also have other characteristics such as:

Leverage - a retail customer can trade with positions up to thirty times their balance. A trader who is categorized as a professional client can operate positions up to five hundred times his balance. This entails risks, because although the profits multiply, so do the losses.
Operate in any direction - Go long or short in a market in order to operate through different, and always changing, market conditions.
Access global markets - operate in Forex, global equity markets, commodities and stock indices.
Trading with CFDs is useful for most of the trading styles and strategies methods you will learn in the next section. For now, let's look at the different types of trading strategies that are available to you.

Trading strategies according to the trend

When it comes to Forex Trading strategies there are two main styles:

• Trend trading
• Counter-trend (or lateral) trading
• There are also other types of less common trading strategies, such as the Carry Trade strategy. This strategy tries to benefit from the spreads of interest rates instead of market direction.

Forex trend tracking strategies buy the market once the resistances have been broken and sell them once the levels have fallen below supports. The trends can be short-term and also prolonged.

Due to the magnitude of the movements involved, this type of system has the potential to be the most successful strategy in Forex Trading. Trend tracking systems use indicators to tell when a trend may have started but there is no foolproof way to know the course.

And here comes good news!

If the indicator can distinguish when there is a moment with a better chance that the trend has begun, the balance is in your favor. The indication that the trend may be forming is called a break.

A break is when the price moves beyond the highest maximum or the lowest minimum in a certain number of days. For example, a break of 20 days on the rise is when the price exceeds the highest maximum of the last 20 days.

Trend tracking systems require a specific mindset. Due to its long duration, during which the benefits achieved may disappear when the market turns. These trading strategies can be psychologically more demanding so you can definitely benefit from a good trading plan.

When markets are volatile, trends will tend to be more camouflaged and the price turns will be higher. This means that a trend tracking system is the best strategy for calm and moving Forex markets.

Following a trend can generate significant benefits and there are many traders that have managed to obtain great results using these systems.

But all that glitters is not gold, since there are also some disadvantages related to these strategies:

• They are difficult to follow
• The great tendencies do not abound
• The conditions that signify the potential start of a trend are not frequent.
• This means that the strategy tends to generate numerous losing trades. The theory is that these losses will be compensated for by winning operations that, although they may be more infrequent, tend to be larger.

On several occasions you will have heard the phrase: "The trend is your friend", but perhaps we should add to this expression "until the end".

The end of the trend comes when the trend fails and this can be difficult to accept by investor psychology.

One of the big problems of trend tracking systems is that you need big capitals to be able to track them effectively. This is because having a large amount of capital reduces the chances of going bankrupt during a prolonged period of losses.

Therefore, trend strategies can be useful and easy to understand as Forex strategies for beginners, but it may not be ideal for the health of these

Trend FX Trading Strategy - Moving Average Crossing

Another Forex strategy uses the simple moving average (SMA). Moving averages are a lag indicator that uses more historical 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 this average moves. Often, we use the longer SMA along with a shorter SMA.

For this simple Forex strategy, we will use a 25-day moving average such as our short-term SMA and another 200-period moving average as the long-term average

Trend FX Trading Strategy - Donchian.

The Donchian Channels were invented by the future trader Richard Donchian and are indicators of trends that are being established.

The parameters of the Donchian channel can be modified as you see fit, but for this example we will see the 20 day break.

Basically, a break in a Donchian channel suggests one of two things:

1. Buy if the market price exceeds the maximum of the last 20 days.
2. Sale if the market price exceeds the minimum of the last 20 days.

Side Forex Trading Strategies

Counter-trend or lateral Forex strategies are based on the fact that most ruptures do not develop into long-term trends. Therefore, the Trader using this simple Forex strategy seeks to gain an advantage over the previous trend that establishes minimums and maximums.

In theory, the counter-trend strategy is the best Forex strategy to increase self-confidence as it has a very high ratio of success.

However, it is important to mention that the reins should be well subject to risk management. These Forex strategies are based on the support and resistance levels being maintained. However there is a danger of large losses when these levels are broken

FX Trading Strategy - Carry Trade

It is very important to know this strategy, since it is a very widespread trading strategy among the most professional traders, so it is not purely a Forex strategy for beginners. Best of all, it is easy to implement and understand.

The essence of the carry trade is to try to benefit from the difference between the returns of two currencies. To understand this let's put as an example someone change currency that physically.

Imagine that an investor borrows a sum of Japanese yen. Because the Japanese reference interest rate is extremely low (at the time of writing this article the effective rate is zero), the cost of maintaining this debt is negligible.

Once these yen are obtained, the investor changes the yen in Canadian dollars and invests the product in a government bond yielding 0.6%. The interest received on the bond must exceed the cost of financing the debt of the yen borrowed.

But there is a drawback, the currency risk involved in this transaction. If during this operation the yen appreciates enough against the Canadian dollar, the investor will end up losing money. The same principles apply when trading in Forex.

If you buy a currency pair in which the currency of the first denomination (base) has a sufficiently high interest rate, in relation to the second currency (quoted), your account will receive funds from the positive swap rate.

The amount you get is correlated with the amount of currency purchased, so leverage is a help if the strategy is worth it. However, as noted above, there is an inherent risk that this operation ends up on the wrong side due to a movement of the currency pair. Therefore, it is important to carefully select the correct currencies.

Inertia is your friend with this strategy in which you are looking for a currency pair with low volatility. In addition, it is also important to keep in mind that the leverage will end up increasing the losses if you make a mistake.

For some time, the Japanese yen has been known to be used as a financing currency, since Japanese interest rates have been low for a long time and the currency is perceived as stable.

This strategy works well in times of appetite for rising risk, as investors tend to look for higher yielding assets. Actually, the action of the traders that implement this strategy can support this because the more people who use this strategy, the greater the sales pressure on the financing currency.