7 Winning Strategies For Trading Forex

About this book

This book describes seven fundamental and technical trading strategies for trading the foreign exchange markets. The purpose of this book is to show you how you can trade forex with these winning strategies. I will share with you some new ideas, interesting concepts, and the nuts and bolts of how you can implement each

strategy more effectively.

This book is quite different from traditional technical analysis books because, while those books may document the reliability of certain technical patterns, I will explain in this book why certain technical patterns do not work as well in the forex market and therefore need adapting. For example, I have increasingly noticed that in recent times the first attempt of a price breakout more often than not results in a failure.

The strategies that I am going to share with you are suitable for trading the forex market in any time frame – ranging from minutes to weeks. Throughout the book I also explain certain aspects of the forex market so that you can gain an insight into how the market behaves.

Even though each strategy has its own general guidelines, do note that all these strategies are open to individual customisation – flexibility is one of the key ingredients of becoming a successful trader. Flexibility is required for the trader to adapt his or her strategies to different market conditions, as well as for the trader to customise trading strategies to suit his or her own trading style and personality. Therefore, feel free to tweak or modify any of the parameters of these strategies to suit your own preferences.

In my years of trading the forex market, I have found that consistent success came from basing my trading philosophy on three M’s:

• Mind
• Money
• Method

While this book focuses primarily on the Method portion, I wish to emphasise that for any strategy to be profitable, mind mastery and money management must also be incorporated as part of a holistic approach in enhancing one’s overall trading performance – as performance is not assessed based on just a few trades, but on a series of trades made over a specific period of time. The 7 strategies in this book must be applied with discipline and a huge dose of common sense. Their rules and guidelines are not set in stone. What I provide is a guide to implementing these strategies so that you can tilt the odds of success to your side.

Getting Started

Find out why the forex market is constantly growing, and why an increasing number of people are turning to trade this particular asset class in their quest to accumulate wealth. For those who are new to trading, take a look at the differences between investing and trading, and the various choices of trading time frames.

Spot Forex Market Structure

The forex market has long been the exclusive playground of the big players, namely banks, institutional investors and hedge funds. But the playground is no longer restricted to just them; individuals can also participate in this speculative game. However, independent forex traders can be disadvantaged in some ways due to how the spot forex market is structured. It is essential to know where you, the trader, stand in the overall big picture.

How To Overcome The Odds Of Trading Forex

How are you going to tackle the odds that are stacked against you from the start in the forex trading business? In this chapter, I will highlight the three Ms that have brought me success in this field: Mind, Money and Method. Many traders, especially the inexperienced ones, are too fixated on finding the perfect trade setup, the perfect trading system or the strategy that never fails, thus neglecting the other more important aspects that are crucial to good trading performance.

Strategy 1 – Market Sentiment

The forex market is heavily driven by market sentiment, and it is market sentiment that influences traders’ decisions by triggering certain emotions and thoughts. Find out what defines the current market sentiment, and how you can incorporate market sentiment analysis into your trading.

Strategy 2 – Trend Riding

There is so much more to riding trends than simply closing your eyes and buying at any point during an uptrend or short-selling at any point during a downtrend. This chapter shows you how you can jump on a trend when the trend is the most robust, rather than when it is about to end. This way you can ride a trend with a higher chance of success.

Strategy 3 – Breakout Fading

Many false breakouts occur in forex price charts, and the occurrence of these fakeouts provides the perfect opportunity for fading breakouts, that is, trading against those breakouts. In this chapter, I explain why most breakouts fail, and how you can identify high-probability fading opportunities.

Strategy 4 – Breakout Trading

When currency prices break out of certain price levels, a large sustained move in the direction of the breakout may occur, giving rise to a situation whereby big profits could potentially be captured in the least amount of time. The main problem with trading breakouts is that many of these breakout attempts fail. In this chapter I walk you through several guidelines of how you can better identify potential breakout opportunities for this strategy.

Strategy 5 – Decreased Volatility Breakout

This strategy is conceptually similar to the strategy of breakout trading, because in both cases the trader will be hoping for a successful price breakout. This particular strategy, however, requires that the forex market registers a period of relative calm and low volatility before the strategy is to be implemented.

Strategy 6 – Carry Trade

This is a fundamental trading strategy that is highly favoured by institutional investors. In this chapter, I explain how a carry trade works, and highlight some points which you should keep in mind when adopting this strategy in the forex market.

Strategy 7 – News Straddling

The forex market is extremely sensitive to economic and geopolitical news from around the world, especially those which relate to the industrialised countries. The underlying reason why news is so important to forex trading is that each new piece of information can potentially change the trader’s perceptions of the current and/or future situation relating to the outlook of certain currency pairs. Find out how you can trade news releases with a higher probability of success.

Risk disclosure

Trading forex involves substantial risk, and there is always the potential for loss. Your trading results may vary. No representation is made that any information in this book will guarantee profits or prevent losses from trading forex. You should be aware that no trading strategy can guarantee profits.

Further information

For more information about my trading strategies, the proprietary PowerFX Course and other forex market information, please visit the following website where I also host a daily forex blog – www.GraceCheng.com.

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