THE BEST 8 FOREX TRADING STRATEGY
WHAT IS A FOREX TRADING STRATEGY?
Plans are essential to keep a trader disciplined and focused. Here we will cover the various trading styles that can be used to trade forex.
A Forex trading strategy helps to provide traders with insight into when or where to buy or sell a currency pair. However, no forex trading strategy is ‘best’ and not all forex trading strategies were created equal, and some may work better in certain situations. Additionally, several trading strategies exist and each requires varying levels of technical and fundamental analysis.
FOREX TRADING STRATEGIES THAT WORK
You may have heard that maintaining your discipline is a key aspect of trading. While this is true, how can you ensure you enforce that discipline when you are in a trade? One way to help you to have a trading strategy that you can stick to. If it is well-reasoned and back-tested, you can be confident that you are using a high-quality Forex trading strategy. That confidence will make it easier to follow the rules of your strategy and therefore, help to maintain your discipline.
A lot of the time when people talk about Forex trading strategies, they are talking about a specific trading method that is usually just one facet of a complete trading plan. While a Forex trading strategy provides entry signals it is also vital to consider:
- Position sizing- Risk management
- How to exit a trade
1. PRICE ACTION TRADING
Price action describes the characteristics of a security’s price movements. This movement is quite often analyzed with respect to price changes in the recent past. In simple terms, price action is a trading technique that allows a trader to read the market and make subjective trading decisions based on the recent and actual price movements, rather than relying solely on technical analysis. Since it ignores the Fundamental analysis factors and focuses more on recent and past price movement, the price action trading strategy is dependent on technical analysis tools.
2. RANGE TRADING STRATEGY
Range trading includes identifying support and resistance points whereby traders will place trades around these key levels. This strategy works well in market without significant volatility and no discernible trend. Technical analysis is the primary tool used with this strategy.
There is no set length per trade as range bound strategies can work for any time frame. Managing risk is an integral part of this method as breakouts can occur. Consequently, a range trader would like to close any current range bound positions.
3.TREND TRADING STRATEGY
Trend trading is a simple forex strategy used by many traders of all experience levels. Trend trading attempts to yield positive returns by exploiting a markets directional momentum.
Trend trading generally takes place over the medium to long-term time horizon as trends themselves fluctuate in length. As with price action, multiple time frame analysis can be adopted in trend trading.
4.POSITION TRADING
Position trading is a longer-term trading approach where you can hold trades for weeks or even months.
The timeframes you’ll trade on are usually the Daily or Weekly.
As a position trader, you mainly rely on fundamental analysis in your trading (like NFP, GDP, Retail sales, and etc.) to give a bias.
Also, you might use technical analysis to better time your entries.
Let’s say:
You analyze the fundamentals of EUR/USD and determine it’s bullish. But, you don’t want to go long at any price.
So, you wait for EUR/USD to come to Support before taking your position.
Now if your analysis is correct, you could enter at the start of a new trend before anyone else.
5. DAY TRADING STRATEGY
Day trading is a short-term trading strategy where you’ll hold your trades for minutes or even hours (it’s similar to swing trading but at a “faster” pace).The timeframes you’ll trade on are usually the 5mins or 15mins.
As a day trader, your concern is to capture the intraday volatility.
This means you must trade the most volatile session of your instrument because that’s where the money is made.
So, you’ll likely:
- Buy Support
- Sell Resistance
- Trade breakouts
- Trade pullbacks
- Trade the bounce of the moving average
If you’re a day trader, you won’t be concerned with the fundamentals of the economy or the long-term trend because it’s irrelevant.
Instead, you’ll identify your bias for the day (whether to be long or short) and trade that direction for the session.
6. FOREX SCALPING STRATEGY
- 7.00 pm to 2.00 am GMT when both Tokyo and Sydney exchanges are open
- 3.00 am to 4.00 am GMT when both Tokyo and London exchanges are open
7. SWING TRADING
Swing trading is a medium-term trading strategy where you can hold trades for days or even weeks.The timeframes you’ll trade on are usually the 1-hour or 4-hour.
As a swing trader, your concern is to capture “a single move” in the market (otherwise called a swing).
So you’ll likely:
- Buy Support
- Sell Resistance
- Trade breakouts
- Trade pullbacks
- Trade the bounce of the moving average
Thus, it’s important to learn technical concepts like Support and Resident, candlestick patterns, and moving average.
8. CARRY TRADE STRATEGY
A carry trade involves borrowing from a lower interest currency pair to fund the purchase of a currency pair with a higher interest rate This strategy can be either negative or positive, depending on the pair that you are trading. The aim is to profit from the difference in interest rates or the “interest rate differential” between the two foreign currencies.
Join our Affiliate program and Earn referral commission
Join our affiliate program and share prosperity with us. Promote your favorite products and services and earn up to 30% commission .
All you need to do is sign up to our website affiliate program in link below, fill out your invoice profile and get your unique tracking link from our website. You will earn commission from all referrals who purchase from us with your referral link.
https://mohotrend.goaffpro.com/
Why partner with Mohotrend?
Promote made easy
Promote Mohotrend anywhere via our referral link. Save time and money on content creation by linking to products, blogs and more with introducing Mohotrend to your audience.
Commission
Receive a 30% bounty per referral, Plus, the more referrals you drive through the program, the higher your commission tier can go.
Powerful tracking
Our affiliate dashboard offers a comprehensive look at your clicks, trials, sales and commissions. You can view your earnings, track performance, and will get paid at the same time every month.