Trading foreign exchanges requires knowledge about economics; do not expect to take spontaneous decisions and randomly succeed at FOREX trading. Many traders have created different FOREX strategies to fit their personal preferences; other traders choose one of those that have already been proven to be efficient.
The biggest mistake most FOREX beginners do is thinking they can engage in this market randomly. But, no trader can succeed without taking planning seriously.
What to look for when choosing a FOREX trading strategy?
No matter if you are looking to pick a FOREX trading strategy or looking forward to developing your own strategy, you should be aware of various factors like timing, objectives, money, and more, like the next ones:
- Reasons for taking the trade; why should you buy or sell? And, what currency pair should you use?
- Timing your trade; why should you buy now?
- Knowing your limits; learn about money management and knowing how much you can risk per trade and per day.
- Trading objectives, setting up a stop loss, and knowing which would be your profit target.
Analysing all these factors is essential for developing a FOREX trading strategy. If you struggle with creating your own trading strategy, you could search among the best trading strategies and choose the one that fits you almost ─if not─ perfectly in every term possible:
FOREX price action trading strategies
Based on price action, these FOREX trading systems can be used as pure price action trading; they only rely on candlesticks and chart patterns. Although, they might also rely on a combination of other FOREX indicators with price action.
A popular price action trading strategy is the horizontal price channel FOREX trading strategy, and it is based on a price structure called a trading channel. All levels of traders usually use it, be them experienced traders or beginners in the FOREX trading.
Price action changes from a trending market into a market that is consolidating sideways in order to form a horizontal price channel.
They make the same trending pattern, but they do it with their respective support and resistance zone; this way, if the price movement goes close to either extreme, price rejects and will head in the opposite direction.
FOREX scalping systems
Some of the most popular strategies in FOREX trading are FOREX scalping strategies. FOREX scalping is known as a day trading technique; here the FOREX trader executes a trade and exit within minutes, sometimes even seconds.
As a FOREX scalp trader, you’re not looking for big profit targets, your objective is small profit targets per trade, going from 5 to 15 pips. The goal of a FOREX scalper is to make as many trades throughout the trading session. What he wants is that, in the end, all the small profits will add up and exceed the trading losses incurred.
FOREX scalping isn’t for everyone, it is true that many traders do like FOREX scalping, but at the same time, many traders see no point in going for very small profits while being involved in a high-pressure trading environment like this.
FOREX currency news trading strategies
Some people see trading news extremely risky, but many see them as a great way to earn profits.
While trading news can get popular and everybody can have access to them, only those who surely knows what to do should be trading with the news. Many new users have wiped their trading accounts in a matter of seconds just for not knowing what to do since price can quickly turn against you it is required to be really careful trading.
People who trade FOREX currency news tends to go with a 1-minute FOREX news trading strategy which only takes to wait until the news is announced and see what the figures or numbers are.
As you see how the initial market reaction takes its natural course, you will look for a signal to enter when the market reverses temporarily, providing you a great entry.
FOREX trading strategies for beginners
There are also many popular strategies for beginners who are having hard times trying to understand the sophisticated and advanced FOREX trading strategies.
Many users start with basic FOREX trading strategies, and as they advance they go up from there.
Many users start with a daily high low FOREX trading strategy, which is based on a simple concept: if price breaks yesterday’s high or low, it will probably continue in that direction of the breakout.
Since the creation of this basic breakout strategy, many users have made their own variations of it throughout the years. But all of them stay with the same concept: “An object in motion tends to stay in motion until acted upon by an unbalanced force.”