In many ways, there is no real best way to trade forex. Any method can be successful if you devote enough time and energy to understanding it or developing your own system. Of course, when asked about the “best”, people typically want to know about win ratios.
The problem is that if Trader 1 has a 60% win rate with their strategy, that doesn’t mean that Trader 2 will have similar results. Trader 2 may not understand the system as well or they may have very poor risk and money management skills.
The question is generally more complex than simply “what is the best“.
On the other hand, I feel that Price Action Trading is one of the best systems to learn early on. Why? Even if you choose not to trade using a Price Action strategy, the stuff you learn about it is useful in other strategies. Price Action is something that is often important to all traders and quite often helps drive price movements.
Understanding Price Action Trading can provide you an additional edge regardless of how you actually approach the charts unlike strategies that use indicators like RSI and Bollinger Bands.
Another point that can help make the learning and growing to profitability process easier is the understanding that higher time frame charts are easier to trade. They aggregate more information and tend to throw more consistent signals to traders as a result. You have much less noise on your charts.
Be forewarned; not all strategies work the same on different time frame charts.
Price Action does on lower time frames but the signals are not typically as strong or clear.
The best thing you can do is look at various strategies.
When you find one that appeals to you, test it out for at least three months in a demo account.
Many new traders make the mistake of shedding new strategies after a loss or two without giving them a real chance to shine. Forex trading profitably is hard and it is work. It’s not something that anyone just stumbles into success with accidentally.
It takes time and effort to build your skill set and understanding with a particular strategy.
These are the basics of Forex trading you should know
Technical Analysis – It is a method of analyzing price movement on the chart to determine possible future price action by using things like indicators, channels, divergence, and much more.
Money Management Skills – Also known as risk management.You should immediately add money management in your trading strategy when you begin your trading career. It will help your trading capital from losses.
Trading psychology – It is the psychology of a trader. By overcoming psychological influences, such as fear and greed, a trader has a better chance of being successful.