When it comes to selecting strategies to trade, you have the choice between buying one off-the-shelf or trawling the Internet for freebies. The trouble with free forex trading strategies is that they are usually worth about as much as you pay for them. They haven’t been tested, and there is little evidence of their reliability.
The strategies covered here on the other hand, are ones that either I or successful traders I know have used in a consistently profitable fashion…
FREE FOREX TRADING STRATEGIES
N.B. not all of the following strategies are equal in all markets. Some perform better than others, and each individual trader will find some strategies more suitable for them to trade than others.
The Bladerunner is an exceptionally good EMA crossover strategy, suitable across all timeframes and currency pairs. It is a trending strategy that tries to pick breakouts from a continuation and trade the retests. It is not a strategy that thrives on volatility, so time of day and liquidity are very important.
Fibonacci Pivot Trades combine Fibonacci retracements and extensions with daily, weekly, monthly and even yearly pivots. The emphasis in the discussion here is on using these combinations with daily pivots only, but the idea can easily be extended to longer timeframes incorporating any combination of pivots.
The Bolly Band Bounce Trade is best used in a ranging market. I personally find it one of the less reliable of the strategies presented here, but many traders use it in combination with confirming signals, to great effect. If Bollinger Bands appeal to you, this one is well worth a look.
The Dual Stochastic Trade users two stochastics – one slow and one fast – in combination to pick areas where price is trending but overextended in a short term retracement, and about to snap back into a continuation of the trend. This one strategy, like the Bladerunner, can be used on its own to devastating effect.
Overlapping Fibonacci trades are the favourites of some traders I have known. I place their reliability a little lower than some of the others, but if you use them in conjunction with appropriate confirming signals, they can be extremely accurate.
The extra volatility you get when London opens presents some unique opportunities. The London Hammer Trade is my take on an attempt to capitalise on these opportunities. I’ve only used this strategy to any great extent during the London session, but I’m pretty certain it could be used at any time when price is likely to be taking off strongly in one direction, and possibly reversing from an area of support/resistance just as strongly.
As mentioned above, the Bladerunner is a trend following strategy. The Bladerunner reversal just as effectively picks entries from situations where the trend reverses and price begins to trade on the other side of the EMA’s.
If you’ve ever tried to chase price when it bounds away to the upside, only to suffer the inevitable loss when it just as quickly reverses, you will want the secret of the pop and stop trade in your trader’s arsenal. There is a simple trick to determining whether or not price will continue in the direction of the breakout, and you must know it in order to profit from these situations. Even so, this strategy can be tricky to trade. Best combined with extremely positive news having just broken on the pair traded.
The flip side of the pop and stop, this strategy trades savage breakouts to the downside.
The forex fractal is not just a strategy but a concept of market fundamentals that you really need to know in order to understand what price is doing, why it is doing it, and who is making it move. This is the kind of inside info that took me years and many thousands of dollars to learn. It’s yours here for free, so make use of it
There are also several sites on the net offering free strategies. The problem with most of these sites is, as mentioned above, they just give a brief description of each strategy, with little real proof that they work. Consequently, there is a need for greater research on your part before using any of those strategies in your actual trading. Once you have selected a strategy from one of these sources you will of course need to thoroughly back test and forward test it.
The various processes for this are covered in Forex Strategy Testing There are also several commercial systems to consider. Since these are more comprehensive than the simple strategies presented above, and thereby fall into the definition of Forex Trading System, they are dealt with separately in the following section, Forex Trading Systems