Strategies by Professionals
Achieving professional status in the Forex market basically means that one is able to churn out profits consistently. There are numerous ways to find trading opportunities in the Forex market; but strategies used by professionals have similar characteristics - they help traders gain an edge in the market consistently, with minimal risk.
Here are some of the most important elements of strategies by professionals in the Forex market:
Timeframe
In a market that operates around the clock, one can assume that trading all the time off small chart timeframes can generate lots of profits. Except that that is not the case. Strategies by professionals are usually based on finding quality trading setups off long chart timeframes. The logic here is simple - long chart timeframes give a broad, meaningful and more accurate picture of the bias that exists in the markets. There is much less noise than in the short timeframes and basically, a trading signal generated on a long chart timeframe is much more solid, offers higher probability and is less risky than that generated on a shorter timeframe.
Trading Frequency
As a direct consequence of trading long chart timeframes, professional traders usually trade less than most people think. In essence, professional traders are like snipers, while their amateur counterparts are like machine gunners. Professional traders make more precise trading decisions in the market, and will always wait for the perfect set of conditions in the market to form before placing a single trade. Their focus is on protecting their capital, whereas amateurs are driven by the profit objective. In the end, professional trading follows a well-drawn out investment plan, while amateur trading can often be viewed as a form of gambling.
The Best Strategies by Professionals
Professional traders want to harness the power of the Forex market. They want to understand what the market is doing; what the market is telling them. That is why the best strategies by professionals are based around price action trading. Price action trading involves trading off ‘clean’ charts, devoid of any lagging indicators, and essentially, it also involved the reading of price behavior and movement in the markets. Price action traders also do not bother much about the numerous economic news releases or events that have an impact on the markets; they just read the price because everything that can influence a currency pair is already accounted for in the price.
Here are some of the best price action strategies by professionals:
The Pin Bar Strategy
A pin bar is a candlestick that has a small real body and a long wick or shadow. In a market, pin bars show that an asset’s price moved in one particular direction but that it could not sustain the charge and came back to close around the opening price. They signal a developing momentum in the market. Pin bars the great, reliable reversal bars and are ideal for detecting high probability and low risk trading opportunities in trending markets after a recent pullback as well as for confirming a trend reversal.
Inside Bar Strategy
An inside bar pattern consists of two candlesticks: a mother bar and the inside bar. The inside bar is contained completely within the high and low of the mother bar. Professional traders use the inside bar formation as a continuation strategy. If the candlestick(s) succeeding the inside bar break above the high of the mother bar, a Buy strategy will be applied; and if the break is below the low of the mother bar, a Sell strategy will be applied.
Final Word
The best strategies by professionals in the Forex market are based on price action and are very simple. But they are very effective and can help all types of traders make money consistently in the markets, with minimal risk exposure.