5 Top Forex Trading Strategies [2025 Edition]

You may have heard that maintaining your discipline is a key aspect of trading. While this is true, how can you ensure you enforce that discipline when you are in a trade? One way to help is to have a variety of the top Forex trading strategies.

In this 'Forex Trading Strategies' guide, we cover five top forex trading strategies across different trading styles and timeframes. This material is for informational purposes only and is not financial advice. Consult a financial advisor before making investment decisions. 

Forex Trading Strategies: What, Why & How

Let's break down the mechanics of what trading strategies are, why traders use them and how to find one. 

What is a Trading Strategy? 

A Forex trading strategy is a set of rules and techniques a trader uses to decide: 

1. When to enter a trade 
2. When to exit a trade 
3. How much capital to trade 
4. How to manage risk 
5. How to deal with wins and losses 

Trading strategies are designed to help traders make objective, consistent decisions based on market conditions rather than emotions or guesswork. 

Why Use a Forex Strategy? 

A forex trading strategy can assist in: 

• Reducing the risk of emotional decision-making 
• Improve consistency and discipline in setups 
• Identify repeatable patterns in changing market conditions 
• Manage risk and capital more effectively 

Trading is notoriously difficult, however. No trading strategy in the world will work 100% of the time. 

How to Choose a Forex Trading Strategy? 

Here are some factors to take into consideration when choosing a Forex strategy.

Different Types of Forex Trading Strategies 

1. Scalping - These are very short-lived trades, possibly held for just a few minutes. A scalper seeks to quickly trade the bid/offer spread and tries to make a few pips of profit before exiting. It is considered one of the most advanced Forex trading strategies and is not suitable for most traders. This strategy typically uses low time-frame charts and Forex indicators for scalping. The Forex-1-minute Trading Strategy can be considered an example of this trading style. 

2. Day Trading - These are trades that are exited before the end of the day. This removes the possibility of being adversely affected by large moves overnight. Day trading strategies are common among Forex trading strategies due to the high liquidity and 24-hour nature of the Forex market. However, this does not guarantee favourable trading conditions or outcomes. Trades may last only a few hours, and price bars on charts might typically be set to one or two hours. It is an advanced style of trading that may not be suitable for some. 

3. Swing Trading - Positions held for several days, whereby traders are aiming to profit from short-term price patterns. A swing trader might typically look at bars every four hours of the day (4-hour chart), or at the end of each day (daily chart). 

4. Positional Trading - Long-term trend following involves aiming to identify major shifts in price. A long-term trader would typically look at the end-of-day, weekly or monthly charts. The style requires immense patience and discipline, and sound fundamental analysis knowledge.  

The following video is an example of how to create a trading strategy. This video is for informational purposes only and does not constitute trading advice.

Top 5 Forex Trading Strategies 

Below is a sample selection of trading strategies covering different styles and timeframes. They are designed for educational purposes only. Past performance is no guarantee of future performance. This material is for informational purposes only and is not financial advice. Consult a financial advisor before making investment decisions. 

1. 50-Pips a Day Forex Strategy

The 50-pips-a-day Forex strategy uses the early market move on the GBPUSD and EURUSD currency pairs. After the 7 am GMT candlestick closes, traders place two positions or two opposite pending orders. When one of them gets activated by price movements, the other position is automatically cancelled. 

The profit target is set at 50 pips, and the stop-loss order is placed anywhere between 5 and 10 pips above or below the 7 am GMT candlestick, after its formation. This is implemented to manage risk. 

Below is a screenshot of the MetaTrader 4 trading platform provided by Admiral Markets, showing the EURUSD H1 chart. The orange boxes show the 7 am bar. 

2. Forex 1-Hour Trading Strategy

This 60-minute timeframe strategy is used on major currency pairs like EUR/USD, USD/JPY, GBP/USD, and AUD/USD. The indicator used for this strategy is the Moving Average Convergence Divergence (MACD) oscillator, which is available on both MetaTrader 4 and MetaTrader 5. 

Buy Trade Rules: 

Trader enters a long position when the MACD histogram goes above the zero line. The stop loss could be placed at a recent swing low. Stop loss placement is subjective and depends on individual risk tolerance and market conditions. 

Sell Trade Rules: 

Trader enters a short position when the MACD histogram goes below the zero line. The stop loss could be placed at a recent swing high. 

Below is an hourly chart of the AUDUSD. The red lines represent scenarios where the MACD histogram has gone above and below the zero line: 

3. 4-Hour Forex Trading Strategy

A 4-hour Forex strategy can also be considered as a swing trading strategy. This strategy uses a 4-hour base chart to screen for potential trading signals. The 1-hour chart is used as the signal chart, to determine where the actual positions will be taken. 

The strategy uses the 34-period exponential moving average (EMA), as well as the 55 EMA.  

Uptrend: 

1. Price action is above the MA lines 
2. The 34-MA line is above the 55-MA line 
3. The MA lines are sloping upwards 

Downtrend:

1. Price action is below the MA lines 
2. The 34-MA line is below the 55-MA line 
3. The MA lines are sloping downwards 

The MA lines will be a support zone during uptrends, and there will be resistance zones during downtrends. It is inside and around this zone that trend traders may start to look for additional clues to position themselves for a possible continuation of the trend. However, past trend conditions do not predict future market movements. 

Below is a daily chart of GBPUSD showing the 34 EMA (purple line) and the 55 EMA (red line) on the chart: 

4. Forex Weekly Trading Strategy

While many Forex traders prefer intraday Forex trading systems due to the market volatility, some prefer a Forex weekly trading strategy. A weekly candlestick provides extensive market information.  

For this strategy, traders can use the most commonly used price action trading patterns, such as an engulfing, harami or hammer candlestick pattern. 

A few commonly used candlestick patterns in Forex trading are the hammer and shooting star, which look like the images below: 

The opposite of the hammer is the shooting star, which looks like the image below:

The chart below shows the weekly price action of NZDUSD and examples of the patterns shown above.

5. Trend-Following Forex Strategies

One type of example of a trend-following strategy is a Donchian Trend system. Donchian channels were invented by futures trader Richard Donchian, and is an indicator of trends being established. The Donchian channel parameters can be tweaked to your own preferences, but for this example, we will look at a 20-day breakout. 

A Donchian channel breakout suggests one of two things: 

1. Buying, if the price of a market goes above the high of the prior 20 days. 
2. Selling, if the price goes below the low of the prior 20 days. 

Below is a daily chart of EURJPY showing the Admiral Donchian indicator set to 20 bars.

You can download the Donchian Channel indicator from the Admiral Markets Supreme Edition plugin. It's called Admiral Donchian.

Forex Trading Strategy Workflow 

Here is a guide on the workflow of a trading strategy:

Final Thoughts 

There is no single best Forex strategy that guarantees success. A Forex strategy should be designed to help systemise the decision-making process to help identify repeated patterns, and with strong risk management rules. Before trading any strategy with real money, it may be worthwhile to use a demo account first. This allows a trader to trade a strategy in a virtual environment before going live. 

Continue Reading:

• Learn to Trade: A Step-by-Step Guide
• 6 Top Trading Strategies
• Price Action Trading Strategies
• Guide to Algorithmic Trading Strategies

FAQs on Forex Trading Strategies

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