Is there one Forex strategy that outperforms all others?

The answer is both yes and no. No, because there is no single strategy universally agreed upon as the best. Yes, because you can find the strategy that is most profitable for you. But first, what exactly is a Forex strategy?

Definition of a Forex strategy

A Forex trading strategy is a set of analyses that a trader uses to decide when to buy or sell. These strategies are generally based on technical analysis, charting tools, or fundamental, news-driven events. The result is a set of signals that trigger trading decisions.

Many strategies are sold by their creators for a fee, but professional traders eventually develop their own.

Common strategies

Beginners often choose from some well-known, successful strategies. Here are a few of the most common:

Simple moving averages (SMA)

The SMA strategy involves balancing risk and reward. It is one of the simplest and most profitable Forex strategies. A trader sets a 12-period SMA; when the currency price crosses above the SMA, it signals a buy, and when it crosses below, it signals to Stop and Reverse (SAR).

This approach is easy to understand and clearly shows short-term liquidity. It’s ideal for beginners, who can adapt and develop their own setups once familiar with it.

Positional trading

Positional trading, also called long-term trading, is less straightforward than using SMAs but can be the most profitable. The trader opens a position expected to be held for a long time, using a low margin to avoid being stopped out. The goal is to capture large market moves that can span thousands of pips.

Once positions are open, this strategy requires less active attention, and its high profitability makes it very popular.

Scalping

Scalping suits those willing to invest significant time for both profit and education. It can be very profitable financially and rewarding emotionally.

Scalping involves making many trades over 1- to 5-minute time frames, gaining only a few pips per trade. Traders often spend the entire day monitoring entry and exit signals.

It is highly profitable but demands a lot of time and enjoyment of the process.

The most profitable strategy?

Ultimately, the most profitable Forex strategy is the one that makes money while fitting your personality and needs. The three strategies above appeal to very different traders. Find the one that suits you, and you’ll be on your way to success.