A question many beginners traders ask is: What is the best Forex trading strategy?
Is it the Elliot wave strategy? Or should I focus on the MACD indicator? What about the sentiment analysis? Fibonacci maybe?
I could go on and on as there are thousands of tools out there, which can be combined to form an infinity of different trading strategies.
It is therefore necessary to find the best strategy. The one that works best.
Unfortunately, there is NO best Forex trading strategy for everyone.
There are only best Forex strategies for individuals…
Why is there no single best strategy?
1. People reacts differently towards the same situation
Forex trading really is psychological. Because in order to trade, you have to put money at risk.
Yes you need to use money management. Yes you need to set-up your stop loss and exit strategy even before entering the trade.
But you always are putting money at risk. And this is the only way to make profits trading Forex.
Different people react differently towards risks.
Some stay cool while throwing several millions in the markets.
Others are all stressed out when throwing a few hundreds.
This also directly brings us to the second reason why there is no single best Forex strategy available:
2. People have different levels of expertise
When starting off, it is almost impossible to keep cool while trading.
But we all have this fantastic capacity to learn and improve, step-by-step…
Therefore, a Forex strategy that is working for a beginner does not work for an experienced trader. And vice versa.
Your trading strategy will evolve with your skills and expertise.
The best strategy Now for you won’t be the best a few months down the line.
3. People have different beliefs about the market
Believe it or not, there are people successfully trading the markets using such “tools” as the moon cycles or the intensity of the sun’s light.
Now I am not suggesting that you do that (unless you firmly believe it has an influence on the markets and you can build a strategy around it that works).
The point is, in order for a Forex strategy to work for you, you got to believe in it.
If you don’t believe in your strategy, you won’t be able to stick to it.
And if you can’t stick to your strategy then it won’t work for you.
Therefore a best strategy for someone can not work for someone else because this person has different believes about the market.
4. People don’t have the same availability
To trade a certain strategy, you got to have time to do it.
Some Forex strategies require traders to be in front of the computer only a few times a day, even a few times a week.
Other strategies are using very small timeframes which means traders need to stay in the markets “full time”.
When choosing a Forex trading strategy it is important that you take into consideration your availability but also the amount of time you are willing to spend in front of the computer…
Looking at the 4 main reasons why there is NO best Forex strategy (people react differently, people have different levels of expertise, people have different beliefs about the market, people don’t have the same availability), one can easily conclude that in order to build the best Forex strategy for you, you got to know yourself.
Stop looking at every possible strategy, jumping from one to the other every few days.
Look at yourself instead:
What amount are you comfortable risking at the moment?
What is your experience level? Are you just starting out or is it time for you to evolve towards the next step?
What are your beliefs about the market? Do you believe more in technical/sentimental/fundamental analysis? And within these, which kind of tools does make more sense for you?
What is your availability? And even if you have a lot of free time, what amount of time do you WANT to spend every day watching the markets?
Only once you have taken the time to really answer these questions will you be able to shape the framework of your best Forex strategy.
From there on, it is all about testing the markets until you build solid, tested, rigid rules allowing you to comfortably trade Forex on a regular basis with the best strategy ever: THE ONE THAT SUITS YOU.