There are several distinct Forex trading strategies available for all, all around the world. But that does not mean all work or are successful. And with so many strategy types available for you to choose from it can get really frustrating and difficult to choose and make up your mind. Especially when you have to witness others make money while you are still making trial and error efforts.
Now successful Forex traders stand out from other traders by the portfolio of Forex trading strategies they utilise in distinct situations. Ask any seasoned trader and they will let you know that one strategy for all situations is not enough to make the right number of winning trades every time. So it is safe to say that for carrying out smart and successful trades you must know how to apply and choose a trading strategy according to the conditions of the market. This is a key factor along with a good understanding and hold on the basics of economics for becoming a money-making trader.
The ever many Forex trading strategies that are available for you exist with differences in their levels of intricacies. Some rely on basic understanding of the market in accordance with current events while others rely on the utility of technical charts. Following include the top 5 Forex trading strategies that can be used by all for higher chances of successful trading.
Here is a list of top 5 Forex trading strategies:
1. Scalping trading strategy:
Scalping trading strategy is a very effective strategy for many especially because it is considered to be a low-risk strategy. But that does not mean you cannot earn attractive profits from it. When you apply this strategy it involves taking away of profits on small price changes as soon as the trade entered becomes lucrative. Scalping trading strategy arrives at results by growing the number of winning trades by sacrificing the size of the wins. As a whole, it is a highly efficient strategy that requires a great amount of patience.
2. Trend trading strategy:
This type of strategy is entirely based on the logic that prices historically tend to move in a specific manner or trend and the idea behind it is to pick a top or a bottom. In applying this strategy it is required to spot the pairs that are trending either up or down so that traders are able to decide the direction in which they should be inclining to trade. The following step includes having to discover the trade entries with the help of trending indicators. They exist in large numbers so you must choose the one that is suitable for you. Trading indicators have levels that indicate the strength of a currency pair’s movement. The strength determines whether the trade has potentially selling possibilities or buy buying possibilities. This strategy is a must-learn for all traders irrespective of their expertise levels because it is one of the most financially profitable of all strategies.
3. Candlestick trading strategy:
Candlestick charts are the most popular and common chart types utilised by Forex traders. This type of chart stands apart from the other many different kinds of charts such as bar charts or line charts because it is able to disclose much about how the past price reactions were. Candlestick chart is responsible for providing accurate information regarding the past price moments when trading is based on technical analysis. This means traders can easily make their decisions regarding future price movement and action based on how the past price reactions.
4. Fibonacci trading strategy:
You must have already derived the fact that it is named after the famous Italian mathematician which is considered both as a medium to long term strategy. It is utilised to follow support and resistance levels that are repeating. The Fibonacci trading strategy excels when the market is trending and you are already aware that markets historically move in trends which makes it ideal. The fundamental idea behind using this particular strategy is to take buy entries on a retracement at Fibonacci support when the market is trending up. On the other hand, take sell entries on a retracement at a Fibonacci resistance level when the market is trending down. This type of strategy is a game of massive patience. With patience, you can master this strategy and enjoy the profits.
5. Support and resistance trading strategy:
It is essential for all Forex traders to spot support and resistance levels on the charts in spite of the assets they are trading. Support and resistance behave like barriers within the Forex markets and can be detected on the price chart with ease. This is possible because they put off the price from reaching higher or dropping lower. They can be observed on any Forex chart at any time which means they work efficiently in any time frame. It is probably one of the most effective strategies that foretell the future direction of price hikes and drops.
Before applying these strategies ensure that you consider these following three things:
- The amount of time that is available to you.
- How experienced you are – if you are a newbie or you have experience
- How fast do you wish to earn and if you are ready to take the risks.
- Figure out what your trading goals are.
- Determine whether the strategy fits your personality.
Forex trading is all about uncertainty – there is no one formula which is suitable for you. The key is to gain experience and keep trying.
Now that you have considered these aspects you are good to go ahead and give these Forex trading strategies a try and enjoy successful trading while learning the ropes of the Forex trading world. Forex trading involves high amounts of trial and error, therefore trying one or more of these above-mentions strategies will provide you with the ability and skill to identify and understand some of the most effective strategies available.