There are a million and one ways to trade the forex market. But successful forex traders know that simple trading strategies work best.
As a beginner trader, your next step after choosing a forex broker should be choosing a strategy. The newbies from Cyprus can try TriumphFX broker, which offers the MT4 trading platform to try the strategies and will always be there if there are any problems with it.
That’s why we have outlined seven of the most common and effective ones in this article. Each strategy is easy to understand and doesn’t require any fancy indicators.
Whether you are a new trader or an experienced one, these strategies can help you make more profitable trades in the forex market.
Before getting acquainted with each, let’s go over the concept of a trading strategy.
What is a Trading Strategy?
A forex trading strategy is a way for a trader to decide if they should buy or sell a currency pair at any given time. Forex trading strategies can be based on technical or fundamental analysis and news-based events as well.
The trader’s currency trading strategy is usually made up of trading signals that will trigger a buy or sell decision. Note that strategies can be found online or may be developed by traders themselves.
When choosing a forex trading strategy, you should start with the one that is based on your level of experience as a trader and your overall goals. For example, if you are a beginner trader, you might want to start with a strategy that is based on simple moving averages. As you become more experienced, you can move on to more complex strategies.
Here are 7 strategies we have prepared for you. So let’s go through each now.
Trend Trading Strategy
A trend trading strategy is a popular approach to forex investing. It involves using technical indicators that identify market momentum and going long or short accordingly, based on what has happened in past trends of similar currencies pairs
It is important when executing this type of trade to occur with an appropriate risk management plan because it is impossible for traders who have done well before will always succeed moving forward – even though they may predict correctly where prices are headed next.
The most popular technical indicators used to identify trends in forex trading are relative strength index(RSI), moving averages (MAs), and average directional index-ADX.
Breakout Trading Strategy
Breakout trading is a simple and popular forex trading strategy that beginners can use.
A breakout can occur when prices increase above resistance areas (known as bullish) or decrease below support ones (bearish).
The reason why they are so important? Well, most often than not – broader patterns represent starts off the increased market volatility, which means by waiting around until there is an opportunity you could join new trends right before they begin.
The reason this strategy has become so prevalent over time isn’t just because investors are seeking greater returns – they also want less risk involved.
Range Trading Strategy
The idea behind range trading is that prices often hold within a steady and predictable range for given periods. This strategy works best in markets with stable economies, and currencies are not subject to surprise news events frequently enough so they can be relied upon as reliable sources of information about economic conditions or upcoming changes which impact investments greatly.
Range traders can use the same tools as trend-trading counterparts to identify opportune trade entry and exit levels, including relative strength index (RSI), and commodity channel index (CCI) stochastics.
Carry Trade Strategy
The carry trade is a risky but popular strategy in which traders look for opportunities by taking advantage of interest rate differentials between countries. A trader executing this technique “borrows from” low-interest rates currencies to fund higher return investments, then sells those assets when they become more profitable if the outlook has changed since their purchase date was set. Usually, this happens because there is been an unexpected event like political instability affecting markets worldwide which will influence currency values eventually too.
Momentum Trading Strategy
Momentum trading is a strategy that focuses on the strength of trends. It is based on how strong they are, and if they will continue in either direction – up or down.
If a trader wants to use this strategy then he needs to open the position when there is momentum going in one particular direction (either increase more than expected) and close out those positions when things slow down significantly from what was expected by looking at volume volatility timeframes.
News Trading Strategy
Trading the news is an old but still actual strategy that can be applied to your forex positions. The main thing here is that if you are interested in a specific currency pair, make sure you follow events related to those currencies and their economic developments as well as any major political announcements or changes that may affect how traders view their prices moving forward.
MACD Trading Strategy
MACD is a popular forex trading strategy that helps traders identify when prices are trending and at what point they may be about to change direction. This strategy can be especially useful if the trader already knows enough about indicators and can use them to achieve the goals. The MACD strategy indicator has three parts – the MAC DIJoe line, signal line, and histogram.
Forex trading strategies are important for successful trading. Different traders prefer different methods depending on their personalities and goals. The 7 simple forex trading strategies we have outlined should give you a good starting point to find the best strategy for you.
So, if you are just starting out in Forex, or if you are looking to add an additional strategy to your toolkit, we hope one of these will work well for you.
Remember though, no single strategy works all the time – so be prepared to adapt as needed.
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