If you need a basic trading strategy you can try the one below. But remember that how you execute and manage your trades is more important than the strategy itself.

Key concept

Main feature of the Forex market is the rhythm of Quiet Times, followed by a period of Price Hesitation, and finally a Decisive Move in certain direction.

We can try to take advantage of this information by identifying the three stages and acting to extract profit.

Why the markets move like this is of no great importance. There is a natural rhythm to economic activity  and banks opening and closing. The prevailing notion is that banks and large institutions manipulate the market to their advantage and create price levels, accumulation areas and expansion areas.

The importance to us is to identify these stages and act on them.

Identifying Contraction

I use ZigZag indicator with values: 3,5,2 - you can get it here:
ZigZag.mq4

Sometimes Donchian Channel makes it easier to spot the Contraction - get it here:
donchian-channel-MTF.mq4

Identifying Middle and Boundaries of Contraction

Through the middle of the narrowest channel we can draw a line and that will be the reference level to bias our trades.

We will be trading Away from the Contraction.

It's also helpful to identify the boundaries of the channel - the narrowest part, and the expansion. We are basically identifying the area that contains most of the price action.

Trade Bias

• If price is above Contraction we trade Long.
• If price is below Contraction we trade Short

Multiple Time Frames

We have to know where the Contraction area is on Upper time frames.

If we time entries on 5 or 15 min we need to know the Contraction Area on 1 hour... and be aware where the contraction is on 4 hours.

The 4 hour will show how much potential is in the move.

Contraction Areas on Upper time frame consist of multiple Contractions on Lower time frame which can lure us into premature entries.

Price Interaction with Contraction Area

Price is simultaneously Repelled away and Drawn towards Contraction. Usually we make money when price moves away and loose money when caught in the chop.

Note: We can trade Away from Lower time frame and Towards Higher time frame. But, chances are higher if price is both close to Upper and Lower time frame and moving Away from both.

Possible price movement scenarios

Possible Entries

Every time the price leaves the Contraction and then reverses it creates a potential entry. The further away it reverses the more entry opportunities it creates. Until, it crosses the middle of the Contraction at which point we start looking for opposite opportunities.

Basic Concept of Entries

Look for price reversal and be ready to act in the reversal area

Timing an Entry

We follow the price movement as it develops with Stop Orders.

From Lot Size management point of view -  we trade small lots in areas with low probability, and increase lot size when probability is in our favor (upper time frame bias in the same direction and price close to, but clearly out of, contraction zone, clear ZigZag entry pattern, and high potential of movement to next obvious price levels ). Small initial lot sizes also enable us to successfully deal with FOMO.

Trade Management

Once Stop Entry is triggered and the trade is active we need to manage Stop Loss, Break Even and Take Profit.

Stop Loss is usually placed 15-20pips away (depending on pair...assuming 5min entry) or logical Highs and Lows. It's better to have tighter Stop Loss and re-enter rather than hope for reversal. The price level at which we are stopped becomes a Stop Entry once the price has moved 10-15pips away.

One version of managing Stop Loss with
aggressive entries based on previous bar Low

Break Even. Once the price moves 20-30 pips in our favor we move the Stop Loss to Break Even. Or at least reduce the Stop Loss.

Take Profit. We should always have our position with multiple lots - it gives us the flexibility of scaled exit. Some profit can be taken at 30, 50 and 100 pips levels. The rest of the position should be on Break Even at this point, and we can attempt to ride it to the next Contraction Area.

Lot Size Management

It's all about growth. Start small and add only if your trading proves profitable.

Here is an example of a typical 1:200 margin account.

With $1000 we can comfortably trade 0.03 minimum Lot Size (margin needed $540) - assuming 3 pairs traded at the same time, with 3 positions per pair (of course we can split them into 27 positions of 0.01 for greater flexibility)

What would that mean in terms of profitability?

Trading 0.01 Lot Size, If we average 10 successful wins per week with 30 pips profit per trade -  it's $30 profit per week... or $90 trading 0.03 Lot Size. Not impressive on a $1000 account but this performance is enough for a comfortable weekly income when we reach five digit balance.

Here's how it looks.

And this is it -

the rest is simply a matter of execution.