What is a trading strategy?
A trading strategy is often a set of rules for entering and exiting the foreign exchange market that a trader might employ to open and cancel positions. These guidelines may be exceedingly basic or intricate. While sophisticated methods could need several confirmations and indications from various sources, simple techniques often just need a few.

A trading plan could also include some guidelines or rules for money management. Certain strategies, like the Martingale, can only be based on position sizing methods.

In addition to the recommendations for entry and exit and optional money management, strategies are frequently identified by the set of trading tools needed to implement the specified trading plan. Typically, these instruments include of charts, technical or fundamental indicators, market data, or any other trading-related tool. It is important to know which of the necessary instruments you already own before deciding on a plan.

Selecting a technique or strategy that works well for your account balance size and is simple to implement with your daily trading routine is crucial.

Mechanical vs. discretionary Forex strategies.
Mechanical forex strategies are those that trade according to rigorous mathematical formulas without any room for interpretation and without requiring the trader to make any significant trading decisions. A moving average cross strategy, in which MA periods are specified and positions are entered and exited precisely at the point of cross, is a good illustration of a mechanical system. It is simple to backtest a mechanical trading strategy and ascertain its profitability while using one. Expert advisers for MetaTrader or any other trading software can also be used to automate this kind of system. Such tactics typically have the flaw of becoming rigid before fundamental shifts in the behaviour of the market occur. For traders who are familiar with trading automation and backtesting, mechanical strategies are a solid option.

Discretionary strategies are those that retain a certain amount of ambiguity and are difficult to codify into mathematical principles. Only by hand can such tactics be backtested. They are also vulnerable to different psychological biases and emotional mistakes. Positively, discretionary trading offers traders flexibility and the chance to extend profits when they think it is possible, all while helping seasoned traders prevent losses in challenging market conditions. Beginner currency traders should definitely avoid trading using discretion, or at the very least, try to limit how much discretion they use.

Trading strategies.
In this Forex strategy repository, you will find various strategies that are divided into three major categories:
Indicator Forex strategies.
Indicator Forex strategies are such trading strategies that are based on the standard Forex chart indicators and can be used by anyone who has an access to some charting software (e.g., MetaTrader platform). These FX strategies are recommended to traders that prefer technical analysis indicators over everything else:
Price action Forex strategies.
Price action Forex strategies are the currency trading strategies that do not use any chart or fundamental indicators but instead are based purely on the price action. These strategies will fit both short-term and long-term traders, who do not like the delay of the standard indicators and prefer to listen as the market is speaking. Various candlestick patterns, waves, tick-based strategies, grid and pending position systems — they all fall into this category:
Fundamental Forex strategies.
Fundamental Forex strategies are strategies based on purely fundamental factors that stand behind the bought and sold currencies. Various fundamental indicators, such as interest rates and macroeconomic statistics, affect the behavior of the foreign exchange market. These strategies are quite popular and will benefit long-term traders that prefer fundamental data analysis over technical factors:
Testing your Forex strategy.
Testing your trading strategy before implementing it live is crucial. You can test your possible trading strategy using two different methods: forward testing and backtesting.

Back Testing.
A type of strategy test carried out on historical data is called back testing. It can be done manually or automatically. It is necessary to create specialized software for automated back testing. Although more accurate, automated testing necessitates a trading system that is entirely mechanical. Although manual testing is laborious and often imprecise, it doesn't require additional code and doesn't require any particular setup. It is advisable to treat any back testing results cautiously, as the tested strategy may have been tailored to meet specific previous back testing data.

Forward testing.
Either a demo account or a tiny (micro) live account is used for forward testing. You use your method to trade normally throughout these tests, just like you would on a real account. Forward testing can be automated, much like back testing. To implement your technique in this scenario, you would have to build a trading robot or expert adviser. Naturally, your options are restricted to manual testing while using discretionary technique. The outcomes of forward testing are thought to be more representative and helpful than those from back testing.

Interpreting the results.
Whichever method you use to test your approach, you must comprehend the outcomes. Although it makes sense to evaluate the outcomes based on the strategy's profitability, you shouldn't ignore other crucial elements of effective trading methods. They are: large numbers of transactions, high average reward-to-risk ratios, quick drawdown times, low drawdown sizes, and a high probability of winning. Your method should ideally profit from both bullish and bearish trades equally, and the balance curve that results should be steady and uniform with no noticeable dips or extended flat spots.