The Best Forex Trading Strategies

A.Karim Yousfi is a experienced trader and analyst. He is managing a team of 5,000 traders at Audacity Capital London Trading Floor.

Forex trading is a risky money-making strategy that involves buying and selling currencies. To succeed in the industry, you must understand the forex market, learn how to trade, and apply the best risk management strategies to avoid losing your money.

To get there, you must begin by selecting the best forex trading strategies that will work for you in the long run. Although not all professional forex trading strategies will work in every situation, it is better to understand them and know when to use them.

This article will help you know what forex trading strategies are and why you should use them.

Forex strategies are systems used by forex traders to help them determine whether they should sell or buy a currency pair. They help make trading a bit effortless as they provide a clear structure of how a trader should go about the trade.

A suitable forex strategy helps traders analyze and understand the market to execute the trade confidently with better risk management methods. When choosing a forex trading strategy, pick one that aligns with your needs and goals. Some of the things to consider are; time frame, trading opportunities, and position size.

Having a forex trading strategy that works can help you accomplish a lot of things in forex trading. The thing is that there are different trading strategies forex traders use, but all these strategies help traders achieve the following things:

Better Forex Trading Profits

Getting consistent profits is the dream of every forex trader, and the best forex strategies can help you achieve your trading goals. So long as you put your mind to it, you will soon start making better and more profits

Forex Strategies Are Reliable

This is yet another reason why you should use forex trading strategies that work. They help you understand and deal with the market to know when and when not to open a position. Apart from that, trading forex strategies help you learn and improve your trading skills with time.

Reduces Forex Trading effort

Forex trading requires you to study the charts for hours to understand the market. With the best forex trading strategy, you will easily understand the charts and trade better.

Provides Trading Confidence

Many beginners are afraid to trade on a live account because they may lose all their money. Forex strategies that work help minimize risks, and beginner traders also get to understand risk management skills while using these strategies.

If you are new to forex trading, you may not know when to trade or use forex trading strategies. Generally, you can always trade 24-hours a day, every day, but according to some sources, it is wise to trade and take advantage of a strategy forex traders use during the trading opening sessions. For example, in New York, the market opens from 8 a.m. to 5 p.m. In Tokyo, it is from 7 p.m. to 4 a.m., and in London, it is 3 a.m. to noon. All these timeframes are indicated in Eastern Standard Time.

Forex indicators are essential in forex trading as they allow you to know when to open and close a position. You can use the indicators with your forex winning strategies to make a profit. The indicators may include;

• Moving Averages
• Bollinger Bands
• Stochastic
• Pivot Point
• Relative Strength Index
• Parabolic SAR
• Fibonacci, etc.

There are different forex strategies that you can always apply in forex trading to minimize losses and make profits. Here they are;

Day Trading Forex Strategy

This is among the winning forex strategies many traders use, but it is suitable for those who do not want fast-paced or high momentum trading. It involves opening and holding one trade a day, and currency pair intraday price changes determine profits or losses.

Pros and Cons of Day Trading

Pros:

• Limited systemic risk
• No rollover cost
• Minimizes opportunity cost due to account liquidity

Cons:

• It is sensitive to volatility
• Positive risk is minimized due to the slow market

Position Trading Strategy

Unlike day trading, position trading requires you to hold a position for weeks or even years. It is the best forex strategy ever, as traders don’t have to deal with short-term price changes. This strategy is best for patient traders.

Pros and Cons of Position Trading

Pros:

• It is possible to get extraordinary gains
• The precision of market entry and exit is not critical
• Intraday price changes are not very important

Cons:

• You have to rely on fundamentals
• Systemic risk is enhanced

Forex Swing Trading

This is also a forex-winning strategy that involves mid-term trading. It is where you hold a position for several days and make profits by recognizing the swing highs and swing lows.

Pros and Cons of Swing Trading

Pros:

• Short-term volatility is not important
• Extraordinary gains are possible
• Exact Market entry and exit is not critical

Cons:

• Additional rollover cost
• Account liquidity affects opportunity cost

Forex Scalping Strategy

Scalping involves making profits by taking advantage of the small intraday price changes. Scalpers make a target of 5 to 20 pips in every trade. Although the returns are minimal, it is among the successful forex trading strategies used by several traders.

Pros and Cons of Forex Scalping

Pros:

• Several trading opportunities
• Improved success rate
• Exposure to minute systemic risk

Cons:

• You must be consistent
• Sensitive to slippage