forex strategy

3 best indicators for the Ultimate Forex Strategy

There are countless forex trading strategies out there, but not all of them are created equal. We need to find the ultimate forex strategy that works. A good, solid strategy is essential for better and more consistent trading results. Here are a few tips to help you choose the right strategy for you:

  1. Do your research. There is a lot of information out there on different strategies, so take the time to do your homework and find one that suits your individual trading style and personality.
  2. Demo test first. Always demo trade any new strategy before risking real money on it. This will give you a good idea of how the strategy works in real-world conditions and if it is something that you feel comfortable with.
  3. Be patient and disciplined
forex strategy

What is the ultimate forex strategy?

When it comes to trading, forex traders have a multitude of different indicators to choose from. But which ones are the best for developing an ultimate forex strategy? In this blog post, we’ll take a look at 3 of the most commonly used indicators and explore how they can be used to create a successful trading plan. So whether you’re just starting out or you’re looking to refine your current approach, read on for some tips on using these helpful tools!

#1 The ATR indicator | best trading strategy forex

Are you looking for the best market volatility indicator? Then look no other places than the ATR indicator. When ranging, the most common pattern is a triangle The ATR measures the volatility of price changes in any market. This video explains how to use ATR in the market. If the volatility increases with a move, the chances are the move is for real.

Rules for Buy trade:

Look at the chart and draw trend lines. Wait for the ATR indicator to break above 10 EMA. Add a stop loss when you enter the trade.

Watch Trader DNA’s video here for a complete understanding of his “95% Winning “ATR Breakout Trading Strategy”.

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#2 Find perfect entries with the RSI | daily forex trading strategies

If you are saying that RSI (Relative strength index) indicator is not working because it’s a lagging indicator, just do this little trick and it will change your trading dramatically.

You need to look at 2 levels for RSI: the 70-level and the 30-level. If it goes above the 70-level, it’s likely overbought, and will come down, and if it’s below the 30-level, it’s over-sold and it will most likely come up again. If you have learnt to trade it this way, it is actually a recipe for disaster.

You will stick in huge drawdowns quite often, because the trend will continue until it bends, and very often RSI will warn you at these levels way too early. You will be stuck in big moves on the wrong side.

If you trade with the RSI indicator alone, you will end up with relatively huge drawdown before it may turn the right way, as shown in this illustration by TraderTalks. There would be 103 Pips in drawdown with this method.

But there are ways to improve the timing when you use the RSI indicator. The big secret is to wait until the RSI comes back out of the extreme level. It prevents you from being caught by these big moves that keep going overbought or oversold forever. Wait until the RSI is starting back out of the 30- or 70-level, and this will be a big game changer for your ultimate forex strategy.

If you wait taking the trade until the RSI indicator gets out of the overbought/oversold zones, you will get less drawdown and make faster profits. Instead of 103 PIps in drawdown, the current drawdown will be only 54 Pips.

This tells us waiting for the RSI to get out of the extremes, will improve your forex strategy significantly. It will cut your drawdown by almost 50%. You will go through half of the pain as if you took the trade already when the RSI hit the extreme zone.

You may also wonder – when to get out of the position? It is actually a third level that nobody talks about when it comes to the RSI, the 50-level. If the RSI is above the 50-level, it is in an up-trend and you can buy. You can use the RSI to determine a trend! If the RSI is below 50, then it’s must likely bearish, and you can sell.

Example of a bearish currency pair, CHFJPY, when the RSI is below the 50-level. (Selected in green)
Example of a bearish currency pair, CHFJPY, when the RSI is below the 50-level. (Selected in green)

Check out the video below for all the details about the RSI indicator. I hope this forex strategy will improve your entries and make you trading more profitable.

You can also check out our extended article about the RSI indicator here.

#3 ADX | best daily forex trading strategy

Most platforms have 2 different versions of the ADX indicator. One version only has one line on it, the ADX line itself. This version of the ADX indicator can easily be found by searching for indicators and choosing “ADX”.

The second version of the ADX indicator has 3 lines which are the ADX line, the positive directional indicator and the negative directional indicator. Search for DMI and you will find the “Directional movement index” which is the right one. It is used to measure the strength of a trend in the market. It’s a non directional indicator. The job of the ADX line is not to measure the direction of a trend. It’s only job is to measure the strength of a trend.

If the ADX indicator shows a value above 25, it shows that the market is currently trending. When the ADX indicator shows a value below 25, the market is currrently moving sideways. ADX is not suitable for a ranging market, but it is suitable for a trending market. Personally I don’t trade with the ADX indicator when it’s below the 25-value. I always wait for the ADX line to cross above the 25 level.

ADX forex strategy
ADX above 25. Illustration: Trading Beacon

If the positive line is above the negative line, then we are going to enter a buy trade. If the negative line is above the positive line, we are going to enter a sell trade.

The positive line is above the negative line. At the same time the ADX line is crossing the 25 level. Then it’s time to buy.

You may ask when to exit the trade?

The best time to exit the trade is waiting until the positive line crosses the negative line.

ADX forex strategy
When the positive line crosses the negative line, it is time to exit the current trade.

If you want to learn more about the ADX indicator, check out my extended article about ADX here.

Feel free to also watch the video about the ADX indicator for a full understanding of this ultimate forex strategy.

Remember before applying new forex strategies to your real account, it’s highly recommended to test them on a demo account.

If you want to learn more about forex strategies that work, we have covered great ways to:

  • find the trend reversal
  • trade with momentum
  • buy the breakout

Check out 5 forex strategies that actually work here.

What is the best strategy for currency trading?

There is no one-size-fits-all answer to this question, as the best strategy for currency trading will vary depending on the individual trader and their goals. However, some general tips that may be useful for currency traders include staying up to date on current market conditions, practicing disciplined money management, and using stop losses to limit losses in case of a bad trade.

Additionally, it can be helpful to familiarize oneself with the major forex pairs and their volatility so that trades can be planned accordingly. For example, the EUR/USD pair is considered relatively stable compared to other pairs and may be good for beginners or those who are not looking for high risk/high reward trades. Conversely, the GBP/JPY pair is more volatile and can be an exciting pair for scalping.

There is no one “best” strategy for currency trading. However, many traders find that a swing trading strategy can be effective in achieving success in the forex market. Swing trading involve buying a currency pair when it reaches a certain price level and then selling it again when the price has moved higher. This approach can help traders to capture profits from both rising and falling prices.

Another common strategy used in forex trading is trend analysis. This approach involves identifying trends in the market and then placing trades accordingly. Traders who use this method often use technical indicators such as moving averages to help them identify trends.

Ultimately, the best strategy for currency trading will vary depending on the individual trader’s goals and preferences.

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