Forex trading strategies that consistently deliver results are a must-have for any serious forex trader. This is because the market has become flooded with low-quality information.
Some of the people claiming to be forex ‘experts’ have no experience trading and have not made any significant amount from forex.
Worse still, there are now so many scammers who claim to teach people how to make money from forex, only to defraud them of their hard-earned money. Let’s not even get into Ponzi schemes and why Nigerians keep falling for them!
But beyond all this, there are still forex trading strategies that work and deliver results, and we will look at some of them in this article.
The Basics of Consistent Forex Trading
Before jumping into forex trading strategies, you should know what drives consistency in forex trading. So many people just put a TP and SL and then hope for the best. No, it doesn’t work that way!
Any forex trader you see who wins in the long term has something called a Structure.
You can be an emotional gambler who keeps losing money or trade like a pro. But Forex trading for beginners and experts can be easy once you understand these three things:
1. Market Trends
The market moves in trends; it doesn’t just move arbitrarily. In an uptrend, the price forms higher highs and higher lows and in a downtrend, the price forms lower highs and lower lows.
When there is a consolidation, the price keeps moving sideways without a clear direction. So, you should know the trend and follow the trend until it ends.
2. A Trading Plan
At the core of effective training methods is a trading plan. When you don’t have a plan that you stick to, you are just trading on vibes, and that never ends well.
Your trading plan guides you on:
- The timeframes to trade
- The conditions that must be met before you trade
- When you take profits or stop losses.
Forex trading strategies that win must have a plan. And when you have a trading pattern, you must stick with it on both the good and bad days. That is why it must regulate your losses and maximize your wins. Many people don’t have a plan, which is why they easily panic when the market is going against them!
No plan, no wins!
3. Risk Management
How much can you afford to lose? What’s your risk appetite? You must have a structure for it.
As a rule of thumb, don’t risk more than 1-2% of your account on any trade, no matter how good it may look. Protect your capital from unplanned market volatility.
Always make sure your potential reward is more than 2-3x your risk. For example, if you risk $100, then your potential reward should be around $200 – $300, meaning you only need to win about 40% of the time to stay profitable.
This is one core difference between beginner and expert traders. Beginners are looking for forex trading strategies that win 90-100% of the time.
But you really do not have to win every trade to be consistently profitable. You just need to make more money when you win than when you lose.
Now, let’s discuss some forex trading strategies that consistently make money.
Trend-Following Strategy (50 EMA + 200 EMA Crossover)
This strategy is very popular among beginner traders and pros alike. It is simple and straightforward, and helps remove guesswork from your trading pattern.
Basically, the rule of this strategy is that you should trade in the direction the market is already going.
On your chart, you add two lines:
- 50 EMA: tells you the short term movement of the price right now
- 200 EMA: Tells you the overall direction of the trend.
EMA is short for Exponential Moving Average.
Step-by Step Guide for the 50 EMA + 200 EMA Crossover
- Open your chart on whatever platform you use
- Add the 50 EMA and 200 EMA lines
- Observe and wait for them to cross
- Enter your trade in the direction of the cross
| What Happens | What It Means | What You Do |
| 50 EMA moves ABOVE 200 EMA | Trend is going UP | Buy (go long) |
| 50 EMA drops BELOW 200 EMA | Trend is going DOWN | Sell (go short) |
This trading strategy helps you enter the trade after the momentum has been confirmed, keeps you trading with the trend and prevents emotional trading.
Breakout Trading (Support & Resistance Strategy)
This strategy focuses on detecting the major market movements at the point when they begin.
Price generally moves between two levels: that is the support and resistance.
Support means the price point at which the price fall pauses (downtrend) or the price begins to rise.
Resistance is the price point at which the an uptrend (price rise) reverses.
A breakout occurs when the price is able to break through the support or resistance. If the price breaks above the resistance, then you should buy. If the price breaks below the support, then you should sell.
This strategy works well because price usually moves up and down between the support and resistance. But when there is a breakout, it means the market is now highly directional. Breakouts typically occur when there are news events, major economic releases, or market open sessions.
RSI Pullback strategy
RSI means Relative Strength Index. This is one of the forex trading strategies that helps to measure if the market is either overbought (extremely high price, may come down) or oversold (extremely low, may rise).
All you need to do is add RSI (14) to your chart and the platform handles the rest of the calculations.
When RSI is at 70 and above, then the market is overbought, and when it is 30 and below, then it is oversold.
The principle with this strategy is that you buy low when there is an uptrend and you sell high when there is a downtrend.
An important note is that you should not work wth RSI alone. Combine it with trend direction. If the price is trending up, then look for BUY signals alone, and if it is trending down, look for SELL signals alone.
Conclusion
One Article would not make you an expert forex trader. But it can set you on course to become a trader with consistent forex trading profits. Subscribe to our newsletter for more simple guides and tips on investment opportunities in Nigeria including high-risk trades like forex.
