There is no single one best way to trade Forex but there are methods to avoid. After you have avoided the losing trading methods, you need to match your trading strategy to your personality so you can execute it with discipline for long term currency trading success.
Let's first of all start with the worst strategies to use which will see you join the majority of traders who lose at currency trading and we have outlined why, these strategies and systems lose elsewhere on this site.
Losing Strategies to Avoid
Any automated Forex robot or Expert Advisor which has a track record which is made up in back testing. Any trading system which claims it knows some hidden code or secret to help you make a regular income. The strategies to avoid include numerous robots, and methods based on Gann, Elliot Wave or the Fibonacci number sequence.
You also need to avoid complex algorithmic systems (which are normally heavily back tested) and any complicated system because as we discussed elsewhere, simple trading systems work best. In addition, the time period you choose to trade is very important and many teach the best way to trade currencies is to day trade and scalp but it's NOT – Its a losing method and to be avoided.
Now we have discussed how not to trade currencies it's time to look at finding the best Forex trading strategy for you which means – one you can have confidence in and also, matches your personality.
Matching a Trading System to Your Personality
We all have strengths and weaknesses and its important to know them to get the best trading strategy for our personalities. Let's start with some basics first on choosing the type of trading tools you want to use such as watching the news or just using currency charts:
We have already said the best strategies are simple and you can either trade on fundamentals, technicals or mixture of both. Fundamental trading suits someone has knowledge of the economy and can is trading long term. Technical analysis is perfect for beginners, because it just involves watching price action. The choice is yours which ever you prefer both methods work and from my own point of view I like trading from charts but like to know the fundamentals shaping the news so use both.
Another question you need to decide is should use a chart just based on price action or should you use indicators as well? Again this is personal preference but I find it better to use some indicators to help get better and more accurate market timing.
The key questions to ask yourself on deciding which is the best way to trade are:
Do you consider yourself a patient character and do have a high level of discipline and self control in your life?
If you are patient and do, then the best way to trade currencies is with a long term trading system which aims to catch trends in the market which last a week or longer. It's a very time efficient strategy, offers huge rewards and most of the world's top traders are trend followers so this is a trading method you should consider – so what if you lack patience?
If you lack patience or you lack discipline, your trading techniques should be based a shorter term trading strategy where you are in and out of trades quickly and the methods you can use are contrary trading price spikes or trading channels or ranges which is based on a swing trading methodology. In these strategies, your trading signals will be in out the market in normally in around a two days to a week, so these methods take far less discipline and emotional self control than a long term trading system.
The Most Important Trait – to Execute a Trading Plan
Whatever method you do, its very important that you have confidence in the trading plan you are executing. The best strategy is always one which you have confidence in and this will allow you to put your trades in the market with confidence and discipline. You should never follow someone else's strategy without, knowing how and why it works because if you don't know, you won't trade the signals with discipline.
The best currency trading strategy for you is not necessarily the same for someone else. Trading is all about having a simple method, based on sound principles but the key to it making profits is You and matching it to maximize your strengths and minimize your weaknesses. You need a good method but it also needs to be matched to your unique personality and if you do this, you will be non the road to long term Forex trading success.