What Is The Most Successful Forex Strategy? This forex strategy tries to take advantage of times when the market is not trending. It is basically based on statistics that show that the Forex market trades in a range of about 70% of the time and is trending only about 30% of the time.
Because price fluctuations are very unpredictable and irregular when you are in an intermittent formation; it would be better or wiser to trade with a break from this intermittent formation instead of trading.
A breakout approval strategy is aimed at making a profit in such situations when the price goes out of range and as a result usually follows a more predictable path.
Still, we can’t go blind and trade any breaks we find in the charts. In fact, the fact is that most of the outages in the Forex market are fake, and if you’re not very experienced in trading outages, you’re actually going to lose money.
Therefore, a certain set of conditions must be met to increase the chances of making a profitable transaction.
What Is The Most Successful Forex Strategy?
Obviously, there needs to be a December in which the price will break.
Now, for the purpose of this strategy, a December is not only horizontal state; it is also a channel that is inclined up or down, as in a trend. In fact, a channel in horizontal position is the classic form of a transaction interval.
Then we need to have a price drop outside of December or channel before we can even consider entering a transaction.
Finally, we need confirmation of the rupture to initiate a process. This confirmation greatly increases the likelihood that the fracture is real. So it means the transaction will be profitable. Without approval, there is no trading signal according to this strategy.
Note: the mechanics of this strategy can be successfully used to determine actual breaks in single trendlines (without December or channel). However, breaking a simple trend line has proven to be less important than breaking a channel or a range. Therefore, trendlines are not included in this strategy as a condition.
How To Implement The Most Successful Forex Strategy?
Find a well-established channel or December in the chart.
A channel is defined as a time interval in which the price movement trades within two parallel trend lines on the chart or noticeably touches these two trend lines during this period.
For this strategy, as in the following example in the AUDUSD 4H chart; a minimum of three touches are required on each trendline. However, experience tells us that the more trendlines are touched, the more important the channel becomes. Which then makes fracking much more important.
Expect the price to clearly break the range with an proximity outside the range.
Note here that you can swap the break for a December in two directions, short or long, depending on which way it goes. However, the situation is different on the channels, as they usually represent trends. So, the rules here:
You can swap an upward channel break only for the downside, or a downward channel break applies only to the upstream side.
When the opposite happens, it can actually be a trap. (often called a balloon) and the price quickly reverses.
Expect a pullback in price to retest the broken limit (trend line) of the range.
Enter after successful retesting of the Trend line and refusal to return to the channel.
A successful retest means prices are reversed in the direction of breaking off the trend line. Usually this occurs in some inverted candlestick patterns, such as long wick candles (Pin Bar). This is shown in the example below at the entry point.
First Stop Loss Placement
One of the best aspects of this strategy is that it usually provides very tight stops and great profit potential.
Stop loss should be placed just behind the retest of the broken trend line. So:
over the highs retested in a downward fracture( see the AUDUSD graph example above); and
below re-tested lows in an upward range (see USDJPY chart example below).
Goals and profit-taking Rules
For a horizontal December
Measure the height of the range and reflect from the breaking point.
In this way, 4 possible targets can be calculated:
- target-0.5 times the height of the range
- target (most likely result) – height of range 1x
- target-1.5 times range height
- target – 2 times the height of the range
It is best to profit from a portion of the position in each of these goals, or use a follow-up stop after the first 2 goals are reached.
For a sloping channel
Measuring and reflecting the height of the channel is not as reliable as in the horizontal range. Therefore, it is better to target the main support or resistance levels instead.
Zoom out of the setup table for a time frame greater than 1 degree.
Look for past support or resistance levels beyond the break and use them as targets.
If there is no significant level of support or resistance, use Fibonacci Corrections and extensions to determine significant price levels.
Note: trading should not be done if the appropriate target level (support or resistance) is too close to the entry point.
After All, The Most Successful Forex Strategy
This trading strategy is slightly more advanced. Therefore, drawing channels requires experience of recognizing ranges and price action models. However, once you master it, you will become a real professional price action investor.