Best Strategy to Trade in Forex

By Mike Singh

The first thing someone needs when beginning in the Forex market is a well thought out Forex trading strategy. This is because those who do not have a good foreign exchange trading strategy usually end up failing miserably. Of course those who are also in it just for a quick buck, will invariably end up losing in the long run. Those without a clear trading strategy will either lose constantly or just break even.

A lot of times the Forex trading strategy will be different depending on different traders. This is because different kinds of traders needs require different kinds of forex trade strategies. A Forex trading strategy for a day trader will reflect their need to be concerned with day-to-day fluctuations than long-term data. This means that someone who is deciding to become a Forex trader needs to first decide what kind of Forex trader he or she are going to be. Once they decide which kind of trader they are going to be they will better be able to plan their trading strategy.

A very important aspect of every strategy is to be able to lessen any losses or eliminate them altogether. This part of the Forex trading strategy is one that needs to be followed strictly or it can make things a complete mess. Someone who is a day trader will most likely make smaller stops. On the other hand a swing trader will have stops that are less limited. These are both different kinds of foreign exchange trading strategies, but can both lessen losses immensely for either kind of trader.

Another part of a good Forex trading strategy is to plan the size of transactions. This allows many different trades to be made at any time instead of just one huge transaction. This will lessen any loss, by dividing the trades, so not all are affected. This also brings in more discipline to the equation.

Following the trading strategy that you plan out requires discipline and following it to the letter, because the Forex market does not always lend itself to the best opportunities in trading. In the Forex market it is mostly about timing, if not all about timing.

A few other things that need to be incorporated into a good strategy is first of all acquiring accurate knowledge about the way it works, different things that can affect trade and what various software and services that are available to meet their needs for charting and such.

As you can see a lot needs to be looked at when entering the Forex market. Thoroughly and completely researching all these different aspects is an important way of preparing yourself to do so.

Sidus Forex System Strategy

Sidus start trading when he was 15. I (Sidus) was fond of the stockmarket, but due to my limited capital I
could only buy one share. When I eventually choose the stock I wanted, It didn’t go up or down. It just
kept bouncing around. In the end, I sold the stock with a 5% loss.
I was still following the stockmarket, but I decided for myself I needed something more volatile with
more leverage. I discovered options, futures an CfD’s. But they still were to unpredictable.
Eventually, I found my holy grail: Forex. I read all what I could read about it and made some first
profits. I discovered the power of something as simple as the BGX system or Vegas.
I started studying these methods more closely and realized that these simple models could make you
very profitable in the long run.
Over time, I started to adapt the systems with my onw rules. The biggest advantage of the Sidus
Method is that it is not necessary for adding extra filters. Whipsaws will occor, but less frequent.
This system made my trading very profitable as it easy to understand, easy to implement and easy to
find the right entry-points.
SIDUS
What do you need?
- 1H (of 30MIN, but you wil get wore whipsaws) candlesticks/bar charts
- 18 EMA & 28 EMA (put them in red)
- 5 WMA (in blue) & 8 WMA (in yellow)
The 18 EMA & 28 EMA are two red lines who form a tunnel, these will help you to determine the start
of a trend and the end of a trend.
Long term
The WMA & 8 WMA will show you when to enter a trend, they will also help you to see the strenght of
the trends.
Short term
Entry Signals
! You should only open a position, when the red tunnel is extremly narrow or crossed !
LONG: 5 WMA & 8 WMA cross the red tunnel upwards.
If the 5 WMA also crosses the 8 WMA upwards, then the signal is extra strong.
SHORT: 5 WMA & 8 WMA cross the red tunnel downwards.
If the 5 WMA also crosses the 8 WMA downwards, then the signal is extra strong.
Exit Signals
Signals that show the end of the chosen trend:
- Long: The price has reached a top and 5 WMA dives under 8 WMA
Close position
- Short: The price has reached a bottom and 5 WMA jumps above 8 WMA
Close position
Always close your position when boundry’s of the red tunnel cross eachother or when they become so
narrow that they are one! This is a clear sign of a trend reversal. After you see this, close your position
and open a new postion in the other way (If you were long, close, open a short postion)
When in a trade and the 5 WMA & 8 WMA cross the red tunnel -> Pay attention! As long as the red
tunnel boundy’s doesn’t cross eachother there is no problem, but often this is a sign that they will!
Basic rule
!!!Enter a position were the red tunnel boundry’s cross and exit that position when they
cross again!!!
!!! Always use a stoploss - I recommend a 10-15 pip stoploss !!!



Examples:






Remarks
Money management is THE holy grail of forex trading! Please think about this and implement it. If you
use this system it wil give you nice rewards, but use money management to give you larger returns!
This method was manually backtested in real time on EUR/GBP and EUR/USD. I can only say it works for
these pairs, as I didn’t test with others.
I invite you all to make comments or additions, you can contect me at FF Forum

I want to thank Vegas, Bunnygirl and all the nice people of ForexFactory for their great inspiration.
Source: http://www.forexfactory.com
username ‘Sidus’