3 Forex Trading Strategies For Serious Traders That Work!
If you’ve found yourself on this page – I am going to assume you’re very passionate about Forex trading and want to go places with it.
The sad truth is that there are a lot of potato strategies getting cooked up in bedrooms, and passed around on forums, branded the holy grail.
Everyone’s time is precious! There is nothing worse than wasting a lot of your time on a trading system that leads you down the wrong rabbit hole.
Time is a commodity that is non-refundable.
Don’t get me wrong – there is some golden information out there, but you need to have a bit of industry experience under your belt to be able to ‘filter’ what’s worth investing energy into.
The crazy amount of foreign exchange information that poor in when you do a google search can be an overwhelming, and dilute your ability to find reliable trading strategies to get you going.
You might already be trading Forex, but looking for simpler Forex trading strategies to supplement your current regime.
In this tutorial, I am going to share 3 strategies with you which are:
- Forex Trading Indicator free, only need clean price charts
- Require no ‘extra’ tools, just your charting software
- Have a simple & effective price action approach
- Reveal straight-froward, uncomplicated trade signals you can spot easily
When Forex strategies have these kinds of properties, they are easy to stick with for the long run (like a well designed diet).
Let’s put things into gear, and begin…
Forex Trading Strategies Using ‘Indecision Doji’ Candles As Breakout Trading Setups
This is one of the most overlooked and underestimated Forex trading strategies!
There are many definitions for a Doji candle – you can probably find over 10 variants! I am going to stick with the generic definition here, which I think works best.
The ‘indecision’ Doji‘ is the one I trade – it’s a very simple to understand signal, and extremely easy to spot on the charts too.
An indecision Doji candle has a small centered body, with wicks protruding out both ends of the body.
As the title suggests, this candlestick pattern represents indecision. The market is communicating to you that it tried to move higher, and it tried to move lower, but ultimately closed off back around the opening price.
The idea is to catch the breakout of the indecision. In general, we aim to catch bullish runs as price breaks the high, or bearish moves as the market breaks the low of the Doji.
Above: The basic way to trade these is to wait for a breakout from the ‘indecision’ the candle represents. We do this by catching price as it breaks above (buy), or below the candle range (sell).
There are also some more advanced tactics where we wait for a break of one end of the Doji, but only take action if it fakes out, reverses, and breaks the other end instead.
Doji candles print very frequently, and can be seen across a few time frames. Very easy also to spot with your eye!
Above: Yep, Doji candles form often, across all time frames.
One important thing to remember is that the more ‘data’ that you have packed into a candlestick pattern, the more reliable it will be.
Meaning: A Doji on the Daily time frame has magnitudes more value than a Doji on the 5 minute time frame – which is true for any price action Forex trading strategy.
In my crazy price action Forex tips article – I talk about how traders screw themselves over constantly by trading candlestick signals in isolation and give away my approach to a candlestick signal trading strategy decision.
So, the first lesson is: don’t trade every single Doji you see!
What is the difference between a good and a bad Doji signal?
We want to target them at points on the chart which have high technical value. Locations where you know the market has a ‘decision’ to make.
Looking for key locations like:
- Proven support and resistance levels
- Swing levels within a trend
- Trend line structures
- Any point on the chart your technical analysis tells you the market should ‘break or bounce’
Check out this Doji setup below…
Above: The indecision signal formed on a weekly support level – where we highly anticipate a ‘bounce’.
With that logic in mind – we only look for bullish breakouts
Above: As expected, a ‘bounce’ occurred off the major level, and price broke above the indecision high – kicking in our bullish trade order.
It’s all about using your technical analysis to find key areas where you know the price action has a ‘break or bounce’ decision to make. Wait for an Indecision Doji to form, then trade the expected outcome (usually bounces).
Above: With simple technical analysis – we easily spot a clear resistance level on the chart.
An indecision Doji candlestick pattern forms, so we look for bearish follow through off resistance (trading the bounce), and use the break of the Doji low as a trade trigger.
Above: The market follows through with the indecision breakout, and explodes downwards.
We can also use them in trending conditions to catch trend continuation.
The best place to target Dojis in a trend is at swing levels (old support turned new resistance, or reverse of that).
Above: In a trending environment – look for indecision Dojis that form at swing levels. Target breaks in the direction of the trend.
Above: A nice result after trend momentum picked up via the swing point, broke the Doji high to trigger the trade, and continued to trend higher for days.It is as simple as it is critical, that you perform good technical analysis first – then you can line up your Doji breakout idea to see if it fits.
Above: A glance at what separates a good indecision breakout opportunity from a bad one.
Remember, Dojis form very regularly – it’s your job to use your basic technical analysis to filter the bad from the good.
If you don’t have good chart reading skills, and can’t pick up the basic structure or context of the market – you might run into frequent trouble trying to trade these candlestick patterns…
When you apply this Forex strategy – just remember you will see a lot of Dojis printed, but only a small selection of them will be good trading opportunities.
Some key points to remember
- Do your technical analysis first before you consider the Doji as a trade opportunity. In most cases, simple price action analysis will rule it out as a viable trade
- Match them up with important technical points on the chart, where you know the market has an important decision to make – then plan to trade the ‘break or bounce’ via the Doji breakout
- Don’t be tempted to trade Dojis on low time frames – the less data in the candlestick, the less reliable the pattern.
The Flag Pattern – A Trend Continuation Strategy
In my opinion, flag breakouts are one of, if not the best Forex trading strategy for trending markets.
Because of the simple nature – flag breakouts are another overlooked gem, usually because Forex traders are always chasing the more complicated methodologies!
Like always, flag breaks work well on higher time frames – but I’ve even seen them work well on charts like 1 hour time frame!
Here is my ‘to the point’ breakdown of what flag patterns are, and how I trade them:
- A trending structure must be in place.
- A counter sloped, trend line develops against the existing dominant trend (the flag line)
- The flag line breaks in the direction of the trend
- Trade the ‘breakout candle’
Let’s look at an example.
Above: This is my text-book scenario for a bullish flag breakout. A strong trend in place, then shorter frequency lower highs develop against the trend – creating a counter-trend, trend-line.
We’re now waiting for the flag line to break, which signals trend continuation.
Above: A breakout signal! A bullish candle closes above the flag structure. We’re looking for a convincing close here, not a candle with a large upper wick.
Once we have the breakout candle, that’s our cue to get long. There are a few different entry, stop loss, and money management combination you can apply here.
I can’t cover them all here, I’ve dedicated a few modules to these subjects in our War Room Forex course.
The basic way is to buy/sell the breakout candle event (after it closes), and place a stop loss below the breakout candle.
If the breakout candle is really large, then other strategies need to be deployed to tighten the stop.
Above: The follow through move after a breakout candle busted the flag structure.
Hopefully you can see the value in this as a trend continuation strategy.
When the market is trending, these flags are actually forming all the time, right under your nose. If you haven’t been looking for them, then you’ve probably been overlooking many opportunities.
If you’re into the lower time frames (like 1 hour), open up your charts and check out what you’ve been missing…
Above: Even on a 1 hour chart, flag structures are actually worth looking out for.
You can see above during a strong trend, even the 1 hour chart produced the goods. The 1 hour chart is normally a difficult chart to apply swing trading strategies to, but flag breaks within trends just work so nicely.
Above: The power of catching flag breakouts within a trending environment. They key is to make sure the broader market is trending before you consider looking for flag trade opportunities.
You do see flags form within consolidation or in ranging cycles, but they just don’t offer the reliability, or reward potential. That’s why I only use them as a trend continuation trading strategy.
The Rejection Candlestick Reversal Trading Strategy
The rejection candle is one of my most utilized candlestick pattern signals.
The anatomy and concept is similar to the classic ‘Pin Bar’ – which is the most engaged topic of interest in all the price action discussions, and communities online.
Rejection candles are a candlestick pattern that communicates denial of higher or lower prices. The market tries to move to an area, but it ‘rejected’ by the market.
This denial leaves a very distinct feature in the anatomy of the candlestick – a long lower or upper wick.
The better quality rejection candles pack thicker candle bodies (closing in the direction of the rejection).
Above: Simple anatomy diagram, comparing the classic pin bar to the more authoritative rejection candle pattern that I use.
Rejection candles have a thicker body. The ‘bounce’ from the rejection causes the closing price to be higher or lower than the open price.
The thicker body demonstrates more strength and authority as a reversal signal in the rejection candle anatomy.
What’s the #1 quality factor for rejection candles?
I am going to stay something stupidly simple here – the key is to match them up with technical areas on your chart, where you expect price to reverse.
Such a simple concept that many traders don’t use! Most Forex traders out there will trade any and every rejection candle (or pin bar), that pops up on their chart.
I like to target these guys at:
- Weekly support or resistance, the major turning points (counter-trend opportunities)
- Swing points within a trend (trend continuation opportunities)
- Range tops and bottoms
- Very over extended prices (mean reversion opportunities)
Check out the bearish rejection setup below…
Above: A nice bearish rejection candle forming at a resistance level. Remember, rejection candles are a reversal signal – and strong resistance levels are an expected turning point. The signal matches the context!
Above: A very nice follow through move to the down side, after the bearish rejection sell signal printed.
Don’t fall into the trap of ‘trading every candlestick pattern’, just because they’re there. Get into the habit of doing technical analysis first, then build that analysis to the candlestick trade idea, for synergy and quality control.
Above: Simple technical analysis tells us this level is likely to cause the market to bounce, as old resistance holds as new support.
The bullish rejection is printed as a result of a bounce (at least the beginnings of one) – therefor it fits well with our technical analysis, and has a lot of synergy with what’s going with the chart.
Above: The technical analysis and the rejection signal both play out as expected, and become a profitable trade idea.
It’s just as simple as lining up the rejection candle (a reversal signal), which those likely reversal points on your chart.
Try to avoid trading rejection candles when there is a lot of congestion to the left.
Above: An example of not lining up technical analysis, context, or reversal points with your rejection candle signals.
These are dud signals because they hardly met any of the analytical quality control points we’ve talked about in this tutorial.
If you see heavy congestion to the left, and the rejection candle formed in the middle of it all – then that’s a red flag.
Also if you plan to go against the trend (which can be profitable), you better line up strong rejection candles with major reversal points (tip: get these from weekly time frame)
When you look back through your charts to evaluate these signals, take note: you will find them everywhere!
Be careful of confirmation bias – which means you only ‘see’ the profitable signals located at the tops and bottoms of moves in history, but you over look the signals in-between, which are the ones you would have likely been screwed over ‘in the trading moment’.
Rejection candles & pin bars are a fairly straight forward signal, but they are not the holy grail ATM machine that prints out everlasting money (which is how I’ve seen them promoted). They are only lucrative when combined with good technical, and price action analysis.
Forex Traders – Make These Forex Trading Strategies Work For You
I’ve given you a lot of brain food here – ideas should be pouring out of your ears!
The most successful Forex trading strategies need to go beyond the charts. We need strong money management and a solid mindset to complete the recipe for long term survivability in the markets.
Obviously there are risk management techniques that need to be coupled to the strategies you’ve just be shown here. There are ‘risk mitigation’ strategies that I have modeled, and some other aggressive strategies.
But for simplicity sake: my goal is to always make sure that winners pay up way more than my losses – at least 3x more in fact. This positive risk reward ratio is the key to keeping your head above water, and eventually turning a profit over many trades!
There is a saying among experienced Forex traders: “Forex is simple, but it is not easy!”
What we’ve discussed here today is the simple technical side of trading, however, the true mastery comes from a trader’s mind-set, and is what makes him/her a winner in the end. That’s the insanely difficult part no one talks about.
To make these strategies work for you, you’re going to need to be disciplined, focused, and consistent with what you do in the markets. I recommend reading “Trading in the Zone” by Mark Douglas.
That book will give you a real good kick up the culo, and start to dramatically change how you think about your trading.
Did the strategies in this tutorial spark your passion? If so, feel free to look through my other Forex tutorials and videos here – there is a lot of helpful information for free on the site for you.
If you want to really get involved with how I trade, learn all my strategies, secrets, or even get a hold of my custom metatrader software (which does some crazy stuff) – then you’re welcome to check out my private War Room program for Traders.
It contains everything under the one membership to keep things simple – just the way I like my Forex.
So, these are my ‘getting started’ Forex trading strategies that work in today’s markets – which should be especially helpful to newbies.
I truly hope you got some value from this tutorial, and are ready to dig into your trading and try some of this stuff out.
If you liked the content, don’t forget to leave me your comment below.
Best of luck on the charts 🙂
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