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Forex Trading Strategies and Tips
The Best Forex Strategies for Beginners
Are you a beginner who wants to explore different forex trading strategies? Are you looking for the best strategy that can help you master the art of forex trading? Welcome to the world of forex trading then!
Given the fact that the forex market is the largest financial market in the world, it’s no surprise that more and more beginner traders are interested in exploring the amazing complexities of forex trading.
To become a successful forex trader, though, you have to establish a successful forex trading strategy. How?
- Forex Trading Strategies Explained
- The Importance of Establishing a Forex Trading Strategy
- What Are the Best Forex Strategies?
- Top 10 Best Forex Trading Strategies That Work
- Trend Following Trading Strategy
- Trend Line Trading Strategy
- Forex Trading Breakout Strategy
- Momentum Forex Trading Strategy
- Daily Fibonacci Pivot Forex Trading Strategy
- Carry Trade Strategy
- Simple Moving Average Crossover Strategy
- Bolly Band Bounce Strategy
- Fading in Forex Trading
Forex Trading Strategies Explained
Why do I need a trading strategy to conquer the market?, you may ask. Then let’s explain what a strategy is! Strategies are defined as master plans that can help individuals achieve their long-term goals by mobilising different resources.
In forex, a forex trading strategy can be defined as a financial plan based on strong indicators to help traders gain a profitable return from buying and selling forex.
Having a forex trading strategy is the only way to help you stay ahead of the game.
Just think about it! We all know that the forex market is highly popular and appealing among individuals of all backgrounds, right? In fact, the accessibility of the forex market, in addition to its profit-earning potential, has sky-rocketed its popularity among beginner traders and experts alike.
On a global level, your money is just a drop in the ocean. Without a forex trading strategy, you may never make waves in forex. Sadly, 90% of beginners lose money and quit.
The only way to prevent that from happening is by employing a successful trading strategy for beginners.
The Importance of Establishing a Forex Trading Strategy
Now you know why having an effective forex trading strategy is the only way to succeed as a beginner in forex, right?
Whether you are just taking your first steps into forex trading or have already established a name for yourself in the trading community, whether you decide to dive into the dynamic world of day trading or explore the potential of trading the news, the truth is that having a forex trading strategy is crucial.
For beginner traders, in particular, it’s of great importance to spend a significant amount of time searching for forex trading strategies and forex trading educational materials. Forex trading strategies allow beginner traders to draw meaningful financial conclusions that can help them in their future ventures.
Before you try to develop a strategy, though, you should invest enough time and energy in proper forex trading education. This should be an essential part of your strategy for success!
From online courses to webinars, one should understand the basics of forex, the importance of fundamental and technical analysis, and the secrets of forex trading psychology.
In fact, exploring the complexities of trading psychology is key to establishing a profitable strategy. Once you’ve learned how to control your emotions and your impulsiveness, only then you can think of developing a trading strategy.
Beginners can also seek some wisdom from trading coaches and the big fish in the field. Don’t be afraid to ask for help in order to discover the best strategy for your newly-established forex trading style. As a matter of fact, experienced forex players have spent a lot of time, energy, and resources into perfecting their forex trading strategies, as well as crafting plans and tactics.
Do not hesitate to read more about the most successful traders in the world. Why don’t you tickle your senses with some inspirational quotes as well?
What Are the Best Forex Strategies?
So, what are the best forex trading strategies for beginners? The forex trading market is a complex field in which forex trading strategies should tame the market’s liquidity, volume, and volatility.
Numerous forex trading techniques and tactics exist, which can surely confuse newbies. But don’t worry! You don’t have to be a genius to understand how to trade forex.
You only have to analyse a few things first! Do you want to trade full- or part-time? Are you interested in day trading or other trading styles? Do you prefer using technical or fundamental analysis? Are you looking for short-term returns or long-term investments?
Only when you have clear goals, only then you can start exploring different forex trading strategies for beginners. Just remember that - though there are numerous risk management and entry and exit strategies - it’s advisable for beginners to steer clear of complicated forex trading strategies. Once you become aware of how to handle and manage the basics of a plain forex trading strategy, only then you will be ready to explore the more complex areas of forex trading.
Though there are no one-size-fits-all strategies in forex, we at Trading Education can help you explore different strategic moves. Here are some key forex strategies suitable for beginners in the world of forex.
Top 10 Best Forex Trading Strategies That Work
1. Trend Following Trading Strategy
Trend following is one of the best forex trading strategies for beginners, a strategy that can help newbies become experts in the field.
Trend following is a strategy that requires close observation of charts, patterns, and changes. Nevertheless, this forex strategy is pretty straightforward to understand and master, even for beginners. The idea behind it is that forex traders can benefit from the “ups and downs” of the financial market. You just have to keep an eye on a trend, assuming that the trend will continue to follow the same direction.
Here we should note that market trends are usually long-, medium-, or short-term. So you will have to decide if you want a long-term or a short-term strategy, which in turn will give you an idea of what type of data and charts to use.
Learn more about trend following strategies and how to use them.
2. Trend Line Trading Strategy
When it comes to charts and indicators in forex, one of the best forex trading strategies for beginners is the use of trend lines. Basically, you draw a straight line that connects at least two different price points on a chart.
Trend lines present traders with an indication of price movements and directions, assuming that the forex market always moves in trends. Drawing trend lines over your charts will help you spot unseen price movements and economic effects.
That’s right! If you learn how to draw proper trend lines on your own charts, this might increase your chances of making a successful trade. So do not hesitate to employ this effective strategy in your trading ventures as a beginner trader.
3. Forex Trading Breakout Strategy
Taking advantage of breakouts is another effective forex trading strategy - one of the best forex trading strategies for beginners. Note that breakouts are a good indicator for beginner traders because they can show when a new upward trend is starting.
A breakout basically happens when a market moves in a new direction, beyond its support and resistance indicators. Keep in mind that it’s usually us, the traders, who define those changes, showcasing the supply and demand effect in forex.
Though not every breakout results in a new trend, this forex trading strategy is still a good trading opportunity. Simply because if you are on the right spot at the right time, you can enter an emerging trend early on and win.
4. Momentum Forex Trading Strategy
Momentum is one of the best and most popular forex trading strategies for beginners. It’s a trading technique in which traders can buy or sell currencies based on recent price trends.
If an asset price is moving in a certain direction, a trader who uses the momentum forex trading strategy will trade, betting that this price will keep moving in the same direction.
In trading, momentum is determined by aspects like trading volume or the rate with which prices change. When it comes to high volumes, figures show that every day in the world of investing, there is at least one stock that can move up to 30%. Here forex news releases play a crucial role, so always keep an eye on different trading announcements and market news.
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5. Daily Fibonacci Pivot Forex Trading Strategy
Don’t let the name of this forex trading strategy scare you - it’s not as confusing as it sounds! As a matter of fact, the Daily Fibonacci Pivot strategy is one of the best forex trading strategies for beginners.
This strategy employs Fibonacci retracements - one of the top technical indicators in forex - combined with daily (weekly or monthly) pivot levels to calculate support and resistance levels.
All these data would result in providing certain trade entry points. Though the parameters for the Fibonacci levels can be chosen by the trader, experts reveal that most forex traders use 38.2%, 61.8%, and even 100% retracements in their forex trading plans.
6. Carry Trade Strategy
There are many forex trading strategies that can benefit both experts and beginners. The carry trade strategy is one of the best and most effective trading strategies that can be used not only by beginners but by professional traders.
This approach is relatively simple to understand and implement. The implementation of this forex trading strategy can help beginners understand the forex market by making a profit from the yield difference between a pair of currencies.
Here we should note that the interest rate of the currency you are buying should be higher than that of the currency you are selling. The difference between those interest rates will determine the profit you might make.
7. Simple Moving Average Crossover Strategy
Moving average strategies can benefit pros and newbies alike. One of the best and most suitable forex trading strategies for beginners is the Simple Moving Average Crossover method. It focuses on utilising the so-called Simple Moving Average (SMA).
We should note that this forex trading strategy requires the identification of three moving average factors: 1) a fast-moving factor, 2) a slow-moving factor, and 3) a trend indicator.
By using the Simple Moving Average Crossover Strategy, traders can identify different trend directions to set up, buy and sell signals. It’s basically taking older data from a set period (for example, 30 days, which is considered a shorter SMA) and then using it to showcase the average price of a financial instrument.
8. Bolly Band Bounce Strategy
Though many forex trading strategies rely on distinct trends, the Bolly Band Bounce strategy allows traders to trade even when trends are absent. This makes it one of the best forex trading strategies for beginners.
The Bolly Band Bounce forex trading strategy is an effective strategy for mastering the ranging market and a very good way to cope with the restricted range of price movements.
Here we should note that the Bolly Band Bounce strategy relies on Bollinger Bands to form a limit for short-term price movements, so invest in studying forex indicators and statistical charts.
9. Forex Dual Stochastic Trade Strategy
The Forex Dual Stochastic Trade is one of the top trading strategies for beginners. It is a strategy that combines slow and fast stochastics. To be more precise, this strategy can give traders an indication when a trend is overextended.
This forex trading strategy looks relatively simple; however, beginner traders need to obtain some technical analysis knowledge before mastering it.
As stated above, traders should consider their goals, level of knowledge, and expertise before choosing a forex trading strategy on their way to success.
10. Fading in Forex Trading
Fading is another effective forex trading strategy that can help beginners learn forex trading and conquer the forex market.
Note, however, that fading can be risky as it is used to trade against prevailing trends. In other words, this counter-trading strategy allows forex traders to take an opposite position after a change with strong momentum.
Thus, close observation and precise timing become crucial. But you don’t have to be a wizard to be precise and make forex trading easy!
In the end, though the strategies we have presented above are great for beginners, do not forget that most of them are used by professionals as well.
Of course, there are plenty more that can come in handy once you feel confident as a forex trader - a worthy and potentially profitable venture.
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Forex Trading Strategies Summary
From the Bladerunner Reversal Strategy to hedging, there is a wide range of forex trading strategies that can help forex traders succeed. Establishing a successful forex trading strategy is, in fact, the only way you can become a pro in forex trading.
When you master the art of forex trading - with the help of a successful forex trading plan, you can move to more complex strategies, such as scalping. Scalping is a risky technique suitable for experts; scalping is defined as one of the most demanding ways to trade forex and make a huge profit via many small trades.
To establish a profitable trading strategy, you should create a positive financial mindset first. Having realistic expectations and embracing losses are two crucial factors to help you enjoy forex trading. Remember there’s no place for fear, revenge, and greed in forex.
Also, to enjoy your trading strategy, you should create positive trading habits. From a healthy lifestyle to engaging hobbies, one has to build a healthy plan that can enhance their trading routines. After all, there’s more to life than work and money.
- Forex trading attracts more and more beginners from all over the world.
- Newbies are encouraged to start with a simpler forex trading strategy in order to understand the forex trading market.
- Some of the most popular forex trading strategies suitable for beginners include trend following, momentum, carry trade, and even fading.
- To be successful, you need not only an effective forex trading strategy but healthy trading habits and a positive financial mindset.
In the end, when you pick a forex trading strategy, you have to consider your level of knowledge. Always do your own market research as to whether the strategy you choose is truly suitable for your goals. When you get enough evidence of the reliability of your strategy, it’s time to try a more complex strategy and establish a forex trading style. It’s time to become a real expert in the field!
We at Trading Education are here to help you find the best forex trading strategy in order to achieve your goals. Knowledge is just one click away!
Want to Practice your Forex trading strategies?
Now you know what the top 10 Best Forex Trading Strategies are, you’ve got a solid foundation to start your forex trading. The next step is to find a reputable forex broker
On the multi-asset platform eToro, you can start practicing in all of the top 10 strategies that are mentioned on this list. Whether you’ve traded forex before or are just breaking into this form of trading, its user-friendly service is a great way to compare currencies and start trading today.
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Is trading forex for everyone?
Forex trading is a lucrative venture that attracts people from all walks of life. The good news is that trading forex is not rocket science, so not only financial moguls but ordinary people can potentially make money. Yet, forex requires newcomers to analyse different types of data, which can be overwhelming, especially for those who undervalue the importance of trading education and forex trading psychology.
Can I start trading forex with $100?
Yes, you can. Forex is considered the largest financial market in the world, so you can definitely start trading with as little as $100. Do your research and choose a broker, such as eToro, that offers different account sizes. Mind you that a small account may lead to overtrading in an attempt to make money fast. Thus, always invest in self-discipline and ways to control your emotions.
What type of trading is the most profitable?
The most profitable type of trading is the consistent one. The truth is that the forex market can be unpredictable and losing is a normal part of the game. Sadly, some traders try to squeeze every last penny, fail, and quit. If you want to make a profit, invest in realistic expectations, trading education, and consistency instead.