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How Many Trading Strategies Do You Need to Succeed?

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Happy Friday!

This week’s question comes from Moshood, who asks:

How many trading strategies should I have when trading the Forex market?

There are thousands of trading strategies available to the Forex trader.

In fact, when you account for the infinite number of technical indicators available, the possibilities are limitless.

It’s easy to think that the more strategies you use, the more money you will make.

However, I’ve found the opposite to be true.

You don’t need to use twenty, ten or even five different trading strategies to achieve success. And if you try to learn that many at one time, you’re setting yourself up to struggle.

So how many do you need? Moreover, how many should you learn at one time?

The answer to both of those questions might surprise you. Read on to learn how many strategies you might need and how to go about finding the ‘right’ one. I’ll also share my favorite two strategies that you can begin using today.

Learn One Strategy at a Time

I’m a firm believer in learning one trading strategy at a time.

The issue many traders run into is that they spread themselves too thin. They jump from strategy to strategy without taking the time to learn everything there is to know about one in particular.

This creates two issues.

  1. As mentioned above, you can’t learn all of the intricacies of a strategy without devoting the necessary time and energy. And without that, you aren’t likely to find success with it.
  2. No strategy will make you consistent profits right away. Regardless of how good the strategy is, it’s going to take time to know whether it’s profitable or not.

By limiting yourself to one strategy at a time, you will accelerate the learning process. You also find out whether it’s right for you—and your trading career—that much faster.

When I suggest this, I usually get responses like:

With an infinite number of trading strategies out there, how can I possibly find a profitable one if I’m only learning one at a time?

This introduces an interesting dynamic.

You see, most traders start their search by looking for ‘profitable’ strategies. But the thing is, there’s no such thing as a universally profitable trading strategy.

If I were to try to scalp using someone else’s strategy I would struggle, regardless of how profitable that person is with the same strategy.

That’s because I’m not a scalper. It doesn’t fit with my personality nor does it match my overall approach to the markets.

What conclusion can we draw from that?

Start by identifying what type of strategy you think would match your personality. Only then should you concern yourself with finding one that you determine to be profitable.

For instance, if you feel comfortable with swing trading, pursue various strategies related to that type of trading.

If you find yourself gravitating toward the smaller time frames, scalping strategies might be best for you.

There’s no one size fits all, but by identifying a type of strategy first, you’ll save yourself a ton of time and effort in the long run.

As for how many you need, the answer varies. That said, you really only need one or two to succeed in this business.

All you need is one pattern to make a living.

Linda Raschke

If I Had to Use Just Two Patterns

Although I use several chart patterns and candlestick signals to trade Forex, I do have two favorites.

When it comes to chart patterns, nothing compares to equidistant channels. They occur more often than most traders realize and can produce incredibly lucrative trade setups.

They also illustrate market structures like consolidation. That may not sound too exciting, but periods of consolidation often lead to breakouts.

Here’s an example of an ascending channel that formed on the GBPNZD 4-hour chart:

GBPNZD ascending channel break

Notice the breakout that occurred. That move can be traded in the direction of the prior trend, which in this case resulted in several hundred pips.

As for candlestick patterns, nothing comes close to the pin bar in my opinion. It’s a signal I’ve used for years and has worked better than any other.

What makes the pin bar unique is the long upper or lower wick. It suggests an influx of buying or selling pressure in the area.

When you pair that with a key support or resistance level, it becomes a highly effective candlestick pattern.

Here’s an example of a bullish pin bar that occurred on the NZDJPY daily chart:

Bullish pin bar at support

One thing you can try for maximum effectiveness is to combine channels and pin bars.

For example, when a currency pair breaks a channel and then forms a pin bar (or long-tailed candle) on the retest.

EURGBP ascending channel break with bearish pin bar

So there you have it. If you’re looking for a simple chart pattern and a candlestick formation to compliment it, look no further than channels and pin bars.

Keep in mind, however, that these are my favorite. As mentioned earlier, it’s important that you find a strategy, or set of strategies, that fits your personality.

Final Words

I suggest learning one strategy at a time. If you spread yourself too thin, you won’t be able to devote the necessary time and energy to one strategy to see it through.

If I were forced to use just one chart pattern, it would have to be ascending and descending channels. They often occur on 4-hour, daily and weekly time frames, and can produce incredibly profitable setups.

You can also trade within a channel or use it to identify breakout opportunities. This flexibility makes channels one pattern I couldn’t trade without.

The one candlestick pattern I would choose is the pin bar. Its long upper or lower wick provides insight into where there’s an influx of supply or demand, especially when it occurs at support or resistance.

Use pin bars together with channels and you have a combination that can give you an edge in any market.

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Your Turn: Ask Justin Anything

I’d love for this new weekly Q&A to be successful and provide an invaluable repository of answers to common Forex questions.

To do that, I need your help.

Here’s what you can do to get involved and have your question answered in next week’s post:

  1. Ask questions. Post them in the comments below or Tweet them to me @JustinBennettFX
  2. Help me answer questions. If I missed something or if you have something to add, don’t hesitate to leave a comment below.

Leave a Comment:

44 comments
Mimi says

Hi Justin, I only tested 2 strategies when I started learning Forex, but found your strategy (Price Action) to be very simple and effective. The best aspect of Price Action is the absence of indicators and being able to analyse a chart clearly. I have been using Price Action for about 2 years and will never change my strategy.

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    Justin Bennett says

    Hi Mimi, thanks for sharing. Just to clear things up for other readers, I wouldn’t necessarily categorize price action as a strategy. It’s more of a style or general approach to the markets.

    Thanks again for commenting. Enjoy your weekend.

    Reply
Essam says

Excellent as usual Justin.

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    Justin Bennett says

    Thanks, Essam.

    Reply
davy says

Why do you never draw a chart in the future,its not easy he,al you do is drawing support and resistance lines,so easy to do

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Timothy says

By hoping from one strategy to another one suffers from the “cycle of doom”.
Dr VK Tharp

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Ferdnand Mbadiwe Abia says

Very simple to understand. It’s encouraging.

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    Justin Bennett says

    Pleased to hear that. Thanks for sharing.

    Reply
      Shaif says

      hi mate, what EMA you use, I mean 20 EMA and 10 EMA in your daily chart , please

      Reply
Tunde Omojola says

Thanks Justin, you are simply good. I have recorded so much improvement since I started reading your comments.

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    Justin Bennett says

    That’s great to hear. Let me know if you have any questions.

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Steve says

Thanks Justin

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    Justin Bennett says

    My pleasure, Steve. Have a good one.

    Reply
OLTIMER says

Hi Justin. Have found your lessons to be first class.Plenty of entry strategies easy to understand and execute,but struggling with take profit strategy. If I let it run to the measured objective it will reverse a few pips shy of the first key level,and if I take profit at the key level the market will run. Cant seem to find any info in the course to help
with my decision making with regard to locking in profits.

Would appreciate your thoughts

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Petrus says

How to join to become member of dpa? How much is that cost?

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    Justin Bennett says

    Hi Petrus, you can learn all of the details during the free webinar here: https://dailypriceaction.com

    Reply
philip akinola says

Good work! Can you please explain how to identify both ascending and descending channels

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aldri ronwiyono says

Very help for my trade.. thanks so much

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    Justin Bennett says

    You’re welcome.

    Reply
Evodia says

This trading strategies was very helpful. I was shown over 5 strategies to use and ended confused and losteoporosis my money.

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    Justin Bennett says

    That happens quite often. Try to stick with just one until you understand it inside and out. Only then should you add other strategies and techniques to your arsenal. Above all, keep it simple.

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Lesley says

Thank you for the wonderful education. It really help in my trading strategies.
However I fond it very difficult to trade correction waves. Particularly the ABC. I find it too complicated compared to correction waves 2 and 4.
How should I approach trading the ABC correction wave?

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Bernard says

Great insight Justin

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Andrew Slater says

Hi Justin, I have a lot of success Trading S&P ASX 200. using 15 Min chart, I guess more Like scalping, but I also use hedging strategy as well.
Along with your calls I am able to ramp up my earnings, esp during Asian session with ASX.
A Foot in both camps I guess.
I have more than Paid for your Fee, with Just one USD/CAD trade. Many thanks for your efforts, My confidence level has really soared since enroling. Keep up the good work.
Much appreciated
Andrew

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Abul Hasanath says

Thanks Justin for another excellent article. In my short career, I’ve finally settled in price action swing trading. Your articles have tremendously helped me to fine tune my trading.

I’ve a question, “Do we need a candlestick confirmation when price retest a broken level ?”.

Thanks again.

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olatunde adigun says

Nice of you again. I think it is the discipline to apply the knowledge that is invaluable. Your posts have helped me a lot personally.

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Kuda says

What are your thoughts on trading patterns. I see them so well and am often able to spot them as they are forming allowing me to enter before a breakout. For instance i prefer entering on the resistance of a rising wedge as opposed to entering on the break below support. It protects me from all the noise that occurs on the breakout and any fake outs. Is this an edge? Everywhere i go traders say patterns dont work but they work over 50% if the time for me. Please advise

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    Kuda says

    Hi Justin. Any thoughts on the qn i asked above?

    Reply
Olufemi fanawopo says

Thanks a million times Justin,
Your analysis viz-a-viz pin bars, channel breakouts, trendline analysis, candlestick pattern, horizontal lines stuffs had greatly changed my insight and mentality positively towards forex trading.
Thanks

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jose says

I”m fully agree with you, channel is powerful tool

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Linda B. says

Is it possible to look at a chart and know what will happen next without waiting to see a specific pattern? In other words, is it possible to read any chart at any time and know the next likely move?

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    Justin Bennett says

    Linda, it’s never possible to know the next move. That’s a common misconception among traders. It isn’t about ‘knowing’ what will happen; it’s about putting the odds in your favor. There will always be a degree of randomness regardless of how good you are or how much experience you acquire.

    To answer your question, though, you need some form of technical or fundamental analysis to determine the odds. Otherwise, you’re just guessing.

    Reply
Thabang says

Hi Justin

Thanks a million times for the lesson. I’ve been using Support and Resistance together with price action signals and never applied any channels to my analysis. This lesson revealed something about the channels though and thank you very much for that, much appreciated.

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Steven says

Thanks Justin for everything i am learning a lot, once at time will get there. One can also apply breakout strategy on M15

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anant says

how to resist yourself from trading when the markets are consolidateing

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Adewole says

How do I determine the key resistance and support for currency pair. A step by step guide will be appreciated. Thanks.

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Katerina says

Justin, can you recommend any books on channels?
Also, what would you recommend to read on price action?
Thank you 😀

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Akinyinka says

Please can you send equidistant setup patterns for h4 and daily Time frames when they occur?

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Ujang says

Good Explanation..Agree with you

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Naren Das says

Can it be used in stock trading too?

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jessica smith says

Here is many type of strategy of trading like candlestick pattern , many types of chart pattern we use for trading.But you said very true No strategy will make you consistent profits right away. Regardless of how good the strategy is, it’s going to take time to know whether it’s profitable or not this thing is very applicable

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Arunraj says

Hi Justin i want to learn patterns but which patterns works mostly in forex please help me justin

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