TOP 12 popular strategies in 2020

This article discusses the best Forex strategies of 2020: head and shoulders, double bottom, double top, three black crows, swing trading, breakdown strategy and others.

Hello, gentlemen, traders! Another year has come to an end, and it's time to prepare a list of popular Forex strategies of 2019 that will not lose their relevance and in 2020. If you are a beginner trader, then you can safely take any strategy you like from the TOP 12 best Forex strategies of 2020. Only proven and working strategies that really make a profit are presented here.

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1. Head and Shoulders Strategy

Timeframe: H4 / D1
Currency pairs: any

This is a reversal model of Forex trading. Whenever this signal appears, it means that the momentum of the uptrend may end, and the downtrend is about to begin. Simply put, this means that the price of the currency pair, which was on the rise, may begin to fall .

The Head and Shoulders model is formed each time a lower peak (first shoulder) is followed by another higher peak (or head), and then another lower peak (second shoulder).

Note: The head should be the highest and the shoulders on both sides should be below the head.

If you draw a line connecting the lowest points of the two depressions, you will get a "neck line". You must remember that if the neckline slopes down, the signal is considered more reliable.

When to enter into a deal according to the Head and Shoulders strategy?

  1. You need to wait until the price reaches the neck level.
  2. Place a Sell order at the close of the candle.
  3. Your stop loss should be several points (3-5 points) above your right shoulder.

The Head and Shoulders strategy can also be applied to buy transactions. In this case, this pattern is completely mirrored.

2. Trading strategy on trend pullbacks

Timeframe: H1
Currency pairs: any

The strategy on kickbacks implies waiting for the market to recover from the general trend, and then its new leap. Simply put, you enter the market when there is a short-term deviation from the dominant trend.

If the market is in an uptrend, then it is obvious that the market will not constantly grow. At some point, the market will “roll back” before continuing to move up again. This is a great opportunity for traders to join the current trend at a better price. Remember that this strategy can be applied for both upward and downward trends.

How to profit from trading on a pullback strategy?

  1. Define a long-term trend, in this case we have a long-term bear trend.
  2. Define a rollback in a long-term trend. Bullish movement in a common bear market.
  3. Wait for the price to fall back to the resistance or support level (in it may be a trend line), and open a sell order.
  4. Place a stop loss a few points below / above the support or resistance level.

3. Forex News Minute Trading Strategy

Timeframe: M1
Currency pairs: EURUSD, GBPUSD, USDJPY, USDCAD, AUDUSD

No matter who you are, a novice or an experienced trader, we are sure that you know how economic news affects the prices of currencies, and that this is also called fundamental analysis. The most popular economic news is employment data, interest rate decisions, inflation, Nonfarm Payrolls, etc. But how can we use the power of these economic news to our advantage? A one-minute Forex trading strategy will help you do this.

To trade according to this strategy, first wait for the news to be announced, check economic indicators and their compliance with forecasts, wait for the initial reaction, and then open a deal. Suppose the Federal Reserve raised interest rates from 2% to 2.5%. With this strategy, you have to wait for the first reaction to subside, and then open your position.

When to enter a news trading deal?

  1. Identify the news you want to trade, and then find out their scheduled time from your economic news calendar.
  2. After the news announcement, update your calendar to check published values and forecasts.
  3. If the news is favorable for the base currency, the price will obviously soar, or vice versa.
  4. Go to the minute timeframe and check the highs and lows of the candle.
  5. If the news was favorable for the base currency, then the price can soar quite high.
  6. Do not miss any kickbacks to enter the deal.
  7. Buy when the candle breaks the maximum of the previous candle (for sales everything is the same).

See also list of the most reliable Forex brokers.

4. Trading strategy from support and resistance levels

Timeframe: from H1 and above
Currency pairs: any

Support and resistance is one of the most popular and proven strategies you can use. It is used to identify important market areas where most traders place their orders.

Support refers to the area on the price chart where prices fall, but cannot break below a certain level. Resistance is an area on the price chart where prices are rising, but cannot break above the level. These levels are usually indicated by horizontal or trend lines.

How to profit from support and resistance strategies?

  1. Mark on the chart important areas of support / resistance, from which the price repeatedly bounced.
  2. Wait until the price reaches this level, and when it rebounds, you will take your position. So, if it bounces off the resistance level, you will sell. If it bounces off support, you will buy.
  3. Stop loss should be placed below the support level or above the resistance level.
  4. Take profit can be set at the following significant levels of support / resistance.

5. Trading strategy for the candlestick pattern "Inner bar"

Timeframe: D1
Currency pairs: any

The inner bar is one of the most important graphic patterns that you need to get to know. Even if you decide not to trade this pattern, it will help you find important tips on the market.

The “Inner bar” pattern consists of two candles, where the second candle is completely absorbed within the range of the candle of the previous day. In short, the highs and lows of the second daily candle are completely within the range of the previous candle. This signals a possible breakthrough in the market. A breakout is a sharp price movement in any direction - up or down.

Note: The “Inner bar” pattern signals a possible market breakthrough, but does not tell you the direction of this breakthrough.

How to profit from the Inner Bar pattern?

  1. Find the “Inner bar” pattern on the chart and mark the high and low of the second candle.
  2. If the price breaks the maximum of the second candle up, then buy. If the price breaks the minimum of the candle down, then sell.
  3. Place your stop loss a few points above / below the Inner Bar pattern.
  4. Use support / resistance levels as a support for the “Inner bar” pattern, this will significantly increase your chances of a positive outcome of the transaction.

6. Trading Strategy for the Pin Bar Pattern

Timeframe: from H1 and above
Currency pairs: any

The Pin Bar strategy is a fundamental trading method, usually identified by a long shadow with a small candle body. This pattern consists of one candlestick and indicates a sharp price reversal in the opposite direction to the point of the longest shadow.

Note: The shadow should be at least twice as large as the candle’s body. The longer the shadow compared to the body, the more effective the pattern.

How to profit from the Pin-bar pattern?

  1. Identify the Pin Bar pattern found near key areas of support and resistance.
  2. When closing the candle, open a trade opposite to the direction of the shadow. In our example, the shadow is bullish, so we open a sell position.
  3. Place your stop loss a few points above or below the shadow.

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7. Trading Strategy for the External Bar Pattern

Timeframe: H4 / D1
Currency pairs: any

The Outer Bar pattern is an attractive trading reversal strategy when the highs and lows of the candle absorb the previous candles. It is quite easy to recognize it on the chart, since the highs and lows of the previous candlestick are within the range of the second candlestick. The more candles absorbed by the external bar, the stronger the signal.

How to profit from the "External bar" pattern?

  1. Mark the borders of the outer bar.
  2. Place a pending order to break through the external bar.
  3. Place a stop loss a few pips above the high or below the low of the external bar.

8. Swing Trading - Trend Trading Strategy

Timeframe: H4 / D1
Currency pairs: any

A novice trader can greatly benefit from a swing strategy. It is based on short-term trading trends, which allows you to hold an asset for a short time. The model relies only on making small profits while reducing losses.

A rule of thumb is that positions using this technique can be open from a few days to a few weeks. The time factor is very important, the average duration of transactions is from 5 to 10 days. The main idea of the strategy is to determine the entry point in the trade in the direction of the trend when trading on fluctuations and then open a position.

How to profit from a trend trading strategy?

  1. Start by identifying the trend you want to take advantage of.
  2. Then, as the market grows, watch for fluctuations in the lows.
  3. Buy during a reversal, if it is an uptrend. Sell for a downtrend during highs.
  4. Place a stop loss a few points below the swing minimum for a buy position and a few points higher for a sell order.

9. Forex Breakout Strategy

Timeframe: H4
Currency pairs: any

A breakdown is usually formed when prices traded in a certain price range break through it and trade below or above the range. This can also happen when prices go beyond a certain level, be it resistance, support or Fibonacci. A breakdown strategy is to enter the market as soon as a breakthrough occurs and exit when volatility decreases.

How to profit from a breakthrough strategy?

  1. Define the range of trading a currency pair, as in the example below.
  2. Open a trade as soon as the price breaks the channel. In this case, this is a sale, since the price has broken the channel down. To reduce the risk of a false breakdown, you can wait for the price to test the channel from the opposite side.
  3. Place a stop loss a few pips from the trade inside the channel.

See also which scalping brokers are the most profitable.

10. The Three Black Crows and Three White Soldiers Strategy

Timeframe: D1
Currency pairs: any

The Three Black Crows strategy is a bearish pattern that you can use to predict a potential reversal in an existing uptrend. This strategy uses three consecutive bearish candles after an uptrend.

Before trading on this strategy, make sure that the second candle has more body than the first. In addition, the second candle should close near its minimum, leaving a slight lower shadow. Finally, the third candle should be at least the size of the range of the second candle.

How to profit from the Three Black Crows strategy?

  1. Find the Three Black Crows pattern on a bull trend.
  2. Open a sell order at the end of the third raven.
  3. Place a stop loss just above the first crow.

The Three White Soldiers strategy has the same trading rules as the previous strategy. It consists of three consecutive bullish candles, which should be sought at the end of the bearish trend.

11. Double bottom strategy

Timeframe: H1 / H4
Currency pairs: any

The Double Bottom pattern is one of the most popular and simple reversal strategies. This usually happens when the price tests the support area twice, forming two bottoms.

This pattern is formed after a long downtrend and can be used as a signal to open a long position.

How to profit from the Double Bottom Strategy?

  1. Define the Double Bottom pattern in the market after a long-term downtrend.
  2. Place a pending Buy Stop order just above the neckline.
  3. Place your stop loss just below the low of the double bottom.

12. Double Peak Strategy

Timeframe: H1 / H4
Currency pairs: any

The Double Peak pattern is a reversal trading model that occurs at the end of a bull trend. It consists of a price fluctuation, when the price tests the resistance level twice, forming two peaks, after which the market turns into a bearish trend.

How to profit from the Double Top strategy?

  1. Identify the double top in the market after a long-term uptrend.
  2. Place a pending Sell Stop order just below the neckline.
  3. Place your stop loss just above the high of the double top.

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Conclusions

We reviewed the best Forex strategies of 2020. They were actively used in trading in previous years, and will be profitable this year, as these are proven strategies based on market patterns and many years of experience of traders. Profit you trade!

Read also an overview of the proven strategy Price Action.