What is the Single Most Profitable Strategy for FX Trading?

Is there one most profitable Forex strategy to trump all others?

The answer is both yes and no. No, in that there is no strategy that traders agree is objectively the best. Yes, in that you can find the strategy that is most profitable for you.

But firstly, what is a Forex strategy?

Definition of a Forex strategy

A Forex trading strategy is a set of analyses that a Forex trader uses to determine whether to buy or sell at a particular time. These are generally based on technical analysis, charting tools, or fundamental, news-based events. The outcome is a set of signals to trigger trading decisions.

Strategies are marketed for a fee by the traders who designed them. Professional traders will eventually develop their own strategies.

The accessible strategies

There are some very common, successful trading strategies, from which a beginner is likely to choose. These are some of the most common.

Simple moving averages (SMA)

The SMA strategy involves optimising the trader’s risk along with the reward or profit. It is the simplest and one of the most profitable Forex strategies. The trader will set a 12-period SMA, with intervals set at which, if the currency crosses above the SMA, it can be taken as a signal to buy. If it crosses below the 12-period SMA, it can be taken as a signal to Stop and Reverse (SAR).

This strategy is easy to understand, and shows short-term liquidity very clearly. It is great for a beginner, as once s/he comprehends it, it is possible to adapt and develop their own set up.

Positional trading

Positional trading is not as easy as using SMAs, but it can be the most profitable Forex strategy. Positional trading can also be referred to as long-term trading. The trader opens a position that he expects to hold for a long time, setting a low margin to avoid being Stopped Out. The trader will be looking for enormous, rather than micro, market moves that could reach thousands of pips.

Positional trading does not require a high amount of attention from the trader once the positions have been opened, and its high profitability makes it an incredibly popular strategy. Have a look at Admiral Markets’ guide to getting started in positional trading.

Scalping

Scalping is for those who are not only looking to get into trading and seize profits, but rather want to invest a lot of time in the activity, both for their enjoyment and Forex education.

It can be a very profitable strategy, and not only in terms of money. Emotionally, it is also very rewarding to its proponents.

Scalping is a trading strategy that expects you to complete a very high number of trades, while only gaining a few pips per trade. It is done over 1 and 5 minute time frames, and a trader can spend the whole day monitoring entry and exit signals. 

It is highly profitable, but only for those who have the time to invest and enjoy it.

The most profitable strategy?

Ultimately, the most profitable Forex trading strategy is the one that makes money and suits your personality and needs. The above 3 cover very different strategies that appeal to a widely varying range of people. Find which one suits you, and you'll be on your way to high profits.