hat are the best Forex trading strategies for beginners? This is a common question among traders who are just starting out and for good reason. The Forex market is hugely liquid, with a vast number of participants. It’s no surprise that more and more beginners are interested in exploring its amazing complexities.
But no matter if you’re a beginner or you’ve been trading for years, there are a few trading strategies that you should always keep in your back pocket.
In this article, you can learn more about the best forex trading strategies for beginners.
The Importance of Learning Forex Trading Strategies For Beginners
The simple act of buying or selling currencies is known as Forex trading. Traders use different strategies to determine the best entry and exit points for the currencies in pairs that they purchase on the Forex exchange marketplace.
Following a forex trading strategy is the key to success. For beginner traders, in particular, it’s of great importance to spend a significant amount of time searching for forex trading strategies. Forex trading strategies allow beginner traders to draw meaningful financial conclusions that can help them in the future.
Let’s take a look at some of the most efficient Forex trading strategies for beginners.
01. Price Action Strategy
Price Action strategy is the most used and popular trading strategy in forex trading. It allows a trader to read the market and make subjective decisions based on the recent price movements. The best part of this strategy is that it does not require you to use indicators which makes it easier to use for a beginner. The price action trading strategy is dependent on technical analysis tools.
02. Position Trading Strategy
The position trading strategy is a common trading strategy used by beginners. This strategy works by focusing entirely on long term positions that last for weeks, or even years in some cases! Traders using this strategy keep their leverage relatively low and aim for profits using the bigger price movements that last longer periods.
You can do it without having to sit in front of your screens all day. Your time commitment can be minimal once you do your research and build your trading plan.
03. The Breakout Strategy
Another effective trading strategy is Breakout. A breakout is any price movement outside a defined support or resistance area.
Out of all the trading strategies, position trading encompasses the longest time-frame. Consequently there is a greater potential for profit – as well as an increased inherent risk.
The advantages of position trading include limited maintenance of positions, capitalising on more substantial trends and dampening the ‘noise’ of the market.
04. Carry Trade Strategy
One of the most unique trading strategies is the carry trade strategy. It allows traders to profit from the interest rate differential that arises between the two currencies in a forex pair.
The interest rate of the currency you are buying should be higher than that of the currency you are selling. The difference between both the currencies’ interest rates will play a significant role in profit.
05. Trend Trading Strategy
Trend Trading Strategy is one of the best Forex trading strategies for beginners. It enables traders to identify and take advantage of market momentum. It is considered as a mid to long-term trading strategy
Various tools are used to determine the direction of the trend accurately. Some of those tools are the moving average, relative strength indicators, stochastic, and many more.
06. Range Trading Strategy
Range trading is a forex trading strategy that involves the identification of overbought and oversold currency. Range traders buy during oversold/support periods and sell during overbought resistance periods.
An important thing to keep in mind is that range trading is a strategy that is best-suited for currencies or economies that are stable.
07. Counter Trend Trading Strategy
This particular trading strategy is quite famous among beginners. It attempts to make small gains by trading against the current trend. This strategy works on the belief that trends reverse themselves in time which is where the traders aim for profit.
The only tough aspect of this strategy can be predicting the reversals accurately due to the volatile nature of the market.
We have gone through 7 Forex trading strategies for beginners. Before picking the right strategy, properly research the market and expand your knowledge. Determine which one suits your trading style the best.
Once you have mastered the basic ones and firmly grasped the principles behind them, move on to the ones that are more complex, and improve your skills as a forex trader.
ENHANCE YOUR FOREX TRADING
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