Forex strategy means having a plan you stick to and follow the rules. It can help you with “waiting games”, especially if you are impulsive or impatient. It can prevent you from significant losses and teaches you discipline. There are many forex strategies, and every trader should pick what suits them best. Meanwhile, we will briefly cover most common forex trading strategies and what you need to know before you get into trading. Forex strategies are tightly connected to time frames, which you will see below.
Before you consider becoming a trader, you should check regulations in your country or region and see which companies are regulated and have a certificate. This prevents scams and protects you as well. Same goes for brokers. You will need a trustworthy forex broker to learn faster and adapt to the trader mentality profitable.
You can easily find forex broker reviews and check their credibility so you can put that worry aside. Once you open a trading account, you should talk to your broker about your financial goals, what you need and how much you have, and slowly start creating a trading strategy.
Forex trading strategies
In Forex, you will often hear about short and long timeframes. There are different styles around them, but essentially they are the best strategies to focus on, depending on the current market position. Here are the main ones:
Scalping is the best strategy for short-lived trades that usually last only a few minutes. The goal is to beat the bid/offer spread as quickly as possible, and it’s an advanced Forex strategy that relies on low time frame charts.
Day trading, as the name implies, means you exit a trade before the day ends. This way, you don’t have to worry about large moves that could happen while you’re asleep.
This tactic is used mostly by beginners since the trade can last a few hours, and the charts and price bars are also set in a couple of hours, which makes it pretty simple.
Swing trading means you are holding a position for a couple of days. Why? Because your goal is to make a profit from short-term price patterns. This means checking the bar every 30 minutes or an hour.
Positional trading – This strategy is useful for maximizing profit by using major price shifts. If you are a patient person, then this strategy is for you. Otherwise, look for others because you might get annoyed since you’ll have to wait until the end of the day to look at the charts.
Other strategies that require advanced knowledge
50-Pips a Day Forex Strategy relies on highly liquid currency pairs. These include the most popular currency pairs, such as EUR/USD. After the Candlestick chart closes around 7 am, traders use this opportunity to place two positions or even two opposite orders that are pending.
One of them is bound to be activated by the price movement, meaning the other part will be immediately cancelled. Why does it have the name 50-pips a day?
Because the stop-loss order can be placed between 5 and 10 pips after it’s made the formation. This is because we want to manage risks, and after the conditions are set, the market will do the rest. It’s a greater risk, because, like scalping, it’s also a short-term strategy.
Forex Daily Charts Strategy is highly praised because of its opportunities and less stress overall. You can get over 100 pips a day because the time frame is longer and you can profit more since signals can be more reliable during daily trade.
Forex 1-Hour Trading Strategy – you have exactly 60 minutes for this strategy and currency pairs are great if you are going with this trading way.
Forex Weekly Trading Strategy is for traders who prefer lower positions and risks. You can also get a lot more information about the market if you rely on a weekly candlestick chart.
4-Hour Forex Trading Strategy is a strategy that is also used as a swing trading strategy that relies on a 4-hour chart to spot trading signal location. For the signal chart, you are using the 1-hour chart, and then you decide where the actual position will take place. The signal chart time frame must be a minimum an hour slower than the base chart.
There are many strategies, and you can get confused about where to start. What’s important is considering your free time about Forex trading strategies. How much of it you want to invest in your trading activities, and what type of trader you are. After you think of your options with your broker. It will be easy to start from one, and as you progress try out different ones if you wish.
After read about Forex trading strategies, you should read about Advanced Trading Platform