The Best Forex Strategy

What is the best Forex strategy for trading in today's Forex market? What is the criteria for making this kind of decision as a trader? Many people have an opinion. Go to the Internet and you will be able to Google more methods than you can possibly read or understand if you could. The same would be true if you spent time at your library or bookstore reading through the books.

Typically you will get two kinds of information when it comes to trading strategy. One is objective in nature and one is subjective in nature. This is the primary dividing line that you will see if you look at the broad spectrum of trading Forex or for that matter any financial market.

Let's look at what this means? What is a subjective trading method? Here are some highlights from a book written on what evidence-based trading would include by David Aronson. Subjective methods are not well-defined in terms of the procedures. They are interpretative, therefore subjective. Opinionated. They include private interpretations of individuals. The methods are not computerized. "It is impossible to either confirm or deny a subjective method's efficacy." There is no evidentiary challenge.

What strategies would employ these techniques? Chart patterns for one. Yes, chart patterns do exist but if you listen to any number of traders they will disagree as to type and to which direction that the trade will go. The best thing that can be said about chart patterns is that typically they happen when price is wedged into a corner and must go in one direction or the other. Which way is open for debate.

The same could be said for Elliott Wave. Although seemingly very rational, this method is subjective. Simply read a book on the topic and then find one of several largely attended forums on the subject and you will get varying interpretations on the same currency pair and time frame. In the year I studied this method which included daily study on the forum and using a top Elliott Wave analytic website, I never got a clear directional analysis. Every analysis included the fact that the trade could go either way and there was not clear signal.

In contrast is the objective strategy. This strategy is not fool proof but the signals are unambiguous. They are programmable. The results can be tested. There is no question to the direction of the signal.

The idea when you are looking at a trading strategy to build upon, and I stress that, is to start with a system that can be measured. The best traders use a method that allows them to do this. Regardless of whether you analyze the market fundamentally to determine what you think a currency pair will do, or technically first, you need a point of entry and your trading strategy should employ a trading entry that is objective, not subjective. If you do this you will have a solid foundation for your trading and one that will allow you a way to test it against the prevailing Forex market.