Are you a newbie to the world of forex trading? Do you feel frustrated about which correct forex trading strategies to use? If you feel lost trying to figure this one out, don’t worry because you’re not the only one. Without having a strategy when it comes to forex trading, it’s like your beginning to go out on a journey without a map since you don’t even know where your account will end up.
The best thing about having a forex trading strategy is that you can have some predictions out of trading currencies. In this article, we’ll share with you the best forex trading strategies and how you can trade currencies successfully.
1. Day Trading
This is a short-term trading strategy that comes only during a specific trading session. Day traders commonly avoid overnight positions, so they close out all trades every day. This can actually lessen exposure to market movements when the trader is absentminded to the market.
A lot of day traders utilize trading plans that are based on technical scrutiny on short-term charts that show intraday price action. When you’re a day trader, you won’t need to worry about the fundamentals of the economy or the continual trend because it’s pointless. Instead, you have to determine your bias for the day whether it’s long or short and trade that direction for the session.
2. Position Trading
Position trading, on the other hand, is a long-term trading approach where you can hold trades for weeks or even months. Usually, the timeframes you need to trade on are Daily or Weekly. If you’re a position trader, you’ll hugely depend on fundamental analysis in your trading to give a bias.
You would have to use technical analysis to improve the time of your entries. For instance, you can identify the fundamentals of EUR/USD and analyze its buoyancy. However, don’t go long at any price. Wait for EUR/USD to come to help before taking your position.
3. News Trading
Several forex traders who have bottomless purses and a proper appetite for risk may use this strategy, although they are most likely not ideal for forex beginners. These strategies are also based on fundamental and technical analysis and they commonly benefit from the significant volatility that is usually seen in the forex market instantly after key news releases.
These types of traders normally require monitoring the economic calendars for key information releases. As a news trader, you must watch the market closely prior to the event to identify key support and resistance degrees so you are able to react immediately after the event based on the results.
You are required to maintain strict discipline when dealing with your currency positions in the course of such fast markets and usually place stop-loss and acquire profit orders in the market.
4. Swing Trading
This next one is a medium-term trading strategy where you can cling to trades for days or even weeks. The timeframes you’ll trade on are normally the 4-hours or 1-hour. A swing trader’s job is to catch a “single move” in the market, in other ways, called a swing.
Most likely, you’ll be buying support, sell resistance, trade breakouts, trade pullbacks, and trade the bounce of the moving average. Therefore, you need to learn technical concepts such as Support & Resistance, moving average, and candlestick patterns.
5. Trend Trading
The last on our list is a popular longer-term strategy in forex trading that includes following the succeeding trend or directional movement in the market for a specific currency pair. The trend trading strategy usually involves purchasing on pullbacks in uptrends or you sell on rallies in downtrends.
Once you have taken a position in the direction of the trend, you will most likely hold onto it up until the market outstretches its objective or the trend begins reversing. Trend traders normally utilize trailing stop-loss orders to secure their profits if a notable reversal materializes.
A lot of trend traders also use technical analysis measures including the Average Directional Movement Indicator (ADX) and/or moving averages that loosens the price action so they can better identify trends. You may also use shorter and longer-term moving averages and watch for crossovers to alert a potential reversal.
On the Note
No matter how great your forex trading strategies are when you start trading forex, it’s important that you look for the best online broker you can partner with. Of course, do your research first to make sure that this broker is credible. If you want to start your forex trading journey, you may start the account opening process now and a lot of brokers will happily allow you to open a demo account first to navigate and learn about their services out and trade without any risk prior to depositing your money.
