Forex trading is a very propitious venture that you can make a killing from. In April 2019, FX trading reached $6.6 trillion per day.
If you’ve been itching to get a piece of the pie, then 2020 is the perfect year to do so. However, you’ve probably heard about this from your colleagues that FX trading takes discipline and a proper trading strategy.
Forex trading strategies for beginners tend to be more careful and less aggressive than pro strategies. Slow-and-steady is a good strategy for any forex trading beginner who wants to stay in the game for long.
Initially, the concept of forex trading seems confusing and difficult to grasp. After a while, you’ll get the hang of things, and you can start making good money from FX trading. If you’re just starting FX trading, read on for nine amazing strategies to make a killing.
1. Move Average Crossover
This technique involves using a simple moving average or an SMA. SMA moves a bit slower than the current market price and employs older price data as a lagging indicator.
The higher the time-frame you apply this SMA, the more it will lag. Use longer SMAs in conjunction with shorter SMAs for best results. Monitoring the two will help you get a proper sell signal.
Now when the shorter SMA crosses the longer SMA, then there’s a change of trend. When the shorter one goes below the longer SMA, then you have a bearish trend, which should be your sell signal.
2. Trend Trading
This is an uncomplicated trading method applied by many forex traders of all levels. As the name suggests, it’s forex trading based on a market’s prevailing direction over a period. It’s a medium to long term trading strategy because the trends must show definite direction in the markets
An oscillator will denote the entry points, and you use the risk-reward ratio to determine the exit points. Traders can then employ stop level distances to keep that risk-reward ratio, if it’s positive.
3. Range Trading
Range trading is relatively simple and involves traders placing their trades around support and resistance zones. This strategy needs quite a bit of technical analysis to be fruitful. It doesn’t fare too well with volatile markets.
Range trading doesn’t have any time-frame because they work equally in whatever time frame. You, however, have to be on the lookout for breakouts. Oscillators and price action are ways you can employ to ascertain breakouts.
4. Day Trading
Day trading has a very short time frame ranging from minutes to hours, but no more than a trading day. All trade positions close at the end or before market closing. Though shorter, you can conduct multiple day trades within the same day.
This strategy has a significant number of opportunities to trade. It also has a pretty reasonable risk to reward ratio. However, it’s much more time consuming.
5. Swing Trading
Swing trading is more of a gut reaction trading strategy with a dash of technical analysis. However, despite its speculative nature, it still needs a lot of time investment and a solid technical analysis knowledge.
Trading time frame is typically short sometimes within a few hours and sometimes a few days. Most traders prefer longer trends since they can maximize on many points along the trend.
6. Price Action Trading
This strategy is a more analytical method and takes a lot of time and effort to get right. It involves basing trading decisions on the historical prices of trading commodities. This trading technique can be used with indicators or you can apply it independently.
There’s no suitable time frame for price action trading. It works well in short, medium, and long time frames. This time frame versatility makes it a strategy of choice for both beginners and experienced traders.
7. Position Trading
Fundamental factors are at the core of position trading. However, it’s not entirely devoid of technical methods. It’s a long term strategy that you can use for all markets, including stock markets.
Since it’s a long term strategy, you don’t take into account any minor fluctuations. That’s because traders expect a trading window of weeks, months, and a few years if necessary and are thus negligible in the broader context.
Entry and exit points are determined from technical analysis like the Elliott Wave Theory. It’s a fantastic overall strategy for long term trading but requires a lot of perseverance on the trader’s part.
8. Forex Scalping
This is sort of a cumulative short-term trading forex strategy. Scalping means taking small profits multiple times to make a profit. Traders mostly use indicators for their entry points and to validate the trend.
It’s for shorter time frames between thirty minutes to one hour. Typically, you’ll need a concrete understanding of technical analysis methods to get it right. It will take you a good long time to make something significant off of forex scalping strategy.
9. Carry Trade
With carry trade, you borrow a currency at a lower rate and invest it in a currency that yields higher. It’s a strategy for medium to long term trading etched in interest rate fluctuations. It takes minimal time and effort to trade.
Forex Trading Strategies for Beginners Need Discipline
Hopefully, you’re now well acquainted with nine of the best forex trading strategies for beginners. Now, remember that FX trading needs lots of discipline and commitment. Avoid being impulsive, irrational, and impatient, or you won’t succeed with your forex trading.
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