Forex Trading Strategies And Systems

I've been trading the forex markets for several years now so I've developed quite a few different systems in my time. However there are some that are more profitable than others, so let me share you with you some of my most profitable forex trading strategies.

4 Hour Trading Strategy

I created this trading strategy myself and have been using it for several years now. This one system has generated more profits that any other system I have ever used, and yet it's surprisingly simple.

I simply look at the daily trend for a particular currency pair (usually the GBP/USD, EUR/USD or USD/JPY pair) using a very simple but effective technical indicator, then I wait for two EMAs (exponential moving averages) to cross over in the same direction on the 4 hour chart.

I will then enter a position (usually after a slight pull-back) and will employ a two-part exit strategy to maximise my profits. One half of the position will be closed out early for a safe profit, and the other half will be left to run for as long as possible in order to capture those really big price moves.

As I say, this particular forex trading strategy is highly effective, as regular readers of my blog will know because I share my trading results every week in my 'Weekly Trading Updates'.

Anyway if you would like to read all about my 4 hour trading method, you can access it (for free) by filling in the short form to the right and subscribing to my newsletter.

The only problem with trading this strategy is that there will always be quiet periods and particular days where you know you are not going to get any set-ups on any of the major currency pairs. Therefore at times like these I will often employ some of the other trading methods that I keep in reserve:

CCI Divergence Trading System

This is a forex system that I've recently created and it basically uses the popular CCI indicator with two different settings. The key here is to wait until there is divergence between both of the CCI indicators at the same time because this will give you a set-up with a very high success rate.

You don't get that many good set-ups per day using this trading strategy, but when you do, you are likely to make some decent profits because it is a very high probability set-up.

I have discussed this particular strategy elsewhere on this blog so please click here if you want to find out more about this CCI Divergence Trading System.

Forex Income Engine 2.0 Methods

At the time of writing (20 June 2009) I've just started using the three day trading methods included in the Forex Income Engine 2.0 course as well. I've always been quite sceptical about many of the short-term forex methods that I come across, but I've been very impressed with these three methods so far because they do actually produce some very good returns.

Anyway if you would like more details about each of these methods you can read all about them on my Forex Income Engine 2.0 review page.

Forex Nitty Gritty Method

This trading method was included in the Forex Nitty Gritty course and although it is a very basic method, it is actually surprisingly effective. The goal is to look for pairs that are in strong upward or downward trends, wait for a pull-back, and then enter a trade if the trend continues.

I've been using this method on the 15 minute charts for quite a while now and it has always performed well for me because these continuation trends occur all the time.

Again if you would like to find out more about this particular trading method, you may like to read my full review of Forex Nitty Gritty.

Long-Term Trading Strategy

I'm not really a long-term trader but I do occasionally open a position if a good trading opportunity arises. I will usually use the daily charts for these trades and will look at a variety of indicators such as the 200 day moving average, the supertrend indicator, established support and resistance levels, fibonacci levels if applicable, and Marketclub's excellent trading signals.

I will regularly post my long-term analysis of the various currency pairs on this blog, but I will only follow this up with an actual trade if I'm really confident about my predictions.

Other Forex Trading Strategies

Finally as well as all of the trading systems and strategies listed on this page, I also have a few breakout strategies that I like to use when a good opportunity presents itself. I'm also constantly testing out new ideas and reviewing the various trading systems that I get sent regularly by product owners who want me to promote their product.

However for the most part it's my 4 hour trading strategy that I spend most time on because this is my core system which generates the most consistent and reliable profits. All of the other forex trading systems are used to boost my trading pot during the quieter periods of the week.

 

 

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18 Comments on Forex Trading Strategies And Systems »

March 16, 2010

Forex Automatic @ 12:46 am:

For me, I find that the longer term strategies are much more consistent than the ones based of shorter frame time charts. The least that I would use in my trading is the 4-hr chart. Thanks for this very informative blog.

March 17, 2010

Elaine @ 2:42 am:

Hello, i was wondering wheather you teade the news, if you do could you explain why slippage occurs and wheather the broker has control over this?
Also could you give me some advice on what brokerage firms to choose? None of them seem to be completely honest so I'm kind of stuck at this point.

March 26, 2010

Systems Trader @ 9:05 pm:

I liked your trading system, do you think it would work on greater time frames though?

April 7, 2010

Nod @ 11:10 am:

Which technical indicator(s)do you prefer in your 4-hour system and what are your two EMA settings?

April 8, 2010

Khaled Basheer @ 11:08 am:

Dear sir:
Thank you for teaching us your excellent strategy based on H4 chart and EMA's.
Could you please teach me if this strategy is suitable for any pair of currency or it is just for the three mentioned pairs?

Thank you in advance for your help.

April 9, 2010

etop isaac @ 11:01 am:

p/s kindly send smoothed repuls e indicator to my email .thanks .

June 5, 2010

Nod @ 8:17 pm:

On your 4-hour system, do you believe you should enter on a cross only in the direction of the long-term trend? Or would you also enter a cross taking place that is contrary to the trend? If so, do you believe that either type trade is more successful than the other?

Nod @ 8:49 pm:

OK, dumb me. I just went back and read more closely your description of your 4-hour system and I think I see that we would be looking at entering a trade in the direction of the major trend. So, let me change the inquiry. Does this work at all on contrary crossings going against the trend or should one just wait for the same-direction crossings?

June 6, 2010

James Woolley @ 8:30 am:

Hi Nod,

It does work on contrary crossings as well, but it's a lot riskier and the subsequent price moves are not always as big.

I tend to mostly trade with the long-term trend although I will sometimes place the occasional trade against the trend if I think the market is massively overbought or oversold and set to turn around.

June 10, 2010

Nod @ 8:27 pm:

What did I do wrong?

Today I got a sell crossover signal on EUR/USD on the 1-day chart around 15:40 pm at about 1.4370. I went to my 3-hour chart (don't have a 4-hour on my platform)only to find that the last sell crossover on that pair had occured at 18:00 pm at 1.6284 - nearly 48 hours earlier and had been descending ever since. Put a quick trade in and made 10 pips, but if the daily chart had signaled at the same time as the shorter time frame did, I would have had a solid oontract. Wha happen? :^}

Nod

June 26, 2010

uzoma the forex machine @ 8:22 pm:

for me the forex cross over is ideal for me, having said that I believe that forex trading with a trading strategy is the ideal thing for me

thanks for the post

December 7, 2010

Swee Tan @ 11:08 am:

Hello

Just wondering if you have had done any review on FxProSignalAlert.com?

Thanks

Swee

August 19, 2011

peter @ 12:20 am:

For me, I find that the longer term strategies are much more consistent than the ones based of shorter frame time charts. The least that I would use in my trading is the 4-hr chart. Thanks for this very informative blog.

September 21, 2011

Marco @ 12:15 am:

Hello,

I also like to use a 4 hours chart when I want to trade. It's also very important to get a good entry (and a good exist as well) if you want to max your gains, so I often check a 15 mins chart as well.

Using indicators such as MACD is very helpful, especially if you compare your results with other indicators or analyses. Checking the news might be good as well since you can spot good opportunities that way.

Long term trading is also a good option, but it's harder to predict long term trends. I definitly prefer to trade on a short schedule (no more than a week long for a trade position).

I checked some of your posts and I like some of your strategies. Keep it up!

Sincerely,

Marco

February 6, 2012

sameer @ 8:15 pm:

I personally agree with the author. The 4 hour strategy is the best and it is utterly important for the traders to keep patience when there is not much movement in the market. Making hasty decisions are only going to give loses.

June 10, 2012

CFD Trading @ 10:10 am:

I personally prefer the 5 minute chart because I am using mostly scalping an short term strategies. However for deeper analysis, the best way is to use the 4h and day charts.

June 21, 2012

cashbackbinaryoptions.com @ 6:24 pm:

Short term strategies are always preferred in forex as they are in binary options. I personally like binary options more because there is no hassle, no waiting for limit or stop, you just know the result after few minutes that's all.

April 5, 2014

Justin the Price Action Forex Trader @ 2:07 pm:

For me, I do 90% of my price action trading on the daily time frame. Over the past 6 years of trading, I've found that trading price action on higher time frames gives much better signals than the 'chop' you get on the lower time frames.

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