Forex Trading Strategies for Beginners
Foreign currency exchange trading is one of the best markets in the world to trade in. After all, it is by far the largest, most traded, and most liquid market that you could be in. This is why we are here today, to teach you about some great Forex trading strategies for beginners.
Now, there is no denying the fact that Forex trading is not easy. There is a lot of preparation and analysis that needs to go into every single trade.
If you are a newbie, this may all seem quite intimidating. However, today we want to provide you with a list of some simple and easy Forex trading strategies for beginners that can get you started on the right path.
Why Do You Need to Master Trading Strategies?
Before we take a look at some of the best Forex trading strategies for beginners, let’s quickly talk about why being familiar with them is so important.
The reason why establishing a solid trading strategy is so important is because you cannot trade FX blindly, by heart, or by using your gut feeling.
You need a way to identify the best entry and exit points for trades, and this is exactly what strategies do for you. Without a solid Forex trading strategy, making money in the world of FX is nearly impossible.
Simple Forex Trading Strategies for Beginners
Although we do not want to get into great detail about each of these Forex trading strategies for beginners, we do want to provide you with a list of viable options at your disposal. The following methods are all simple Forex trading strategies for newbies, but this doesn’t mean that professional and experienced traders can’t put them to use either. Let’s take a look at some of the easiest ways for you to trade Forex.
A Trend Following Strategy
The trend following strategy is one of the most important Forex trading strategies out there that beginners need to master. There is also the fact that it is super easy to master. The main point of trend following is to identify trends in the market, and therefore benefit from both the ups and the downs in the FX market.
All you have to do is find and identify a trend, observe whether or not it will continue in the same direction, and if it appears to be continuing in the same direction, you open a position. Yes, you do need to keep a close eye on patterns, charts, and changes, but if done right, this trend following strategy can be extremely successful.
A Breakout Strategy
Another one of the great Forex trading strategies for beginners is the simple FX breakout strategy. For those of you who don’t know, a breakout is a good indicator for beginners because they indicate when a new upward trend is going to occur.
A breakout is what happens when a market begins to move in a new direction, generally past the points of support and resistance. Keep in mind that not every single breakout leads to a new trend, but they often do. This is a good way to trade in order to enter trends early on in the world, thus allowing for maximum profit opportunities.
The Trend Line Strategy
FX trading involves a lot of indicators and charts, and if you want to use a lot of them, one of the best Forex trading strategies for beginners is the trend line strategy. You begin this method of trading by opening up a chart and drawing a line between at least two different price points.
Trend line trading therefore provides traders with indications of the movement and direction of prices. If you can learn how to draw proper trend lines on your charts, it can go a long way in making you a much more successful FX trader.
The Daily Fibonacci Pivot Strategy
When it comes to the best and easiest Forex trading strategies for beginners, this daily Fibonacci pivot strategy is definitely one which we would recommend mastering. Yes, it sounds confusing and intimidating, but it really isn’t. The main aspect of this strategy are Fibonacci retracements.
These are combined with daily, weekly, or monthly pivot levels, with the goal being to calculate accurate support and resistance levels. Once you have calculated the support and resistance points, you can then find the right places to enter positions. You may choose your own parameters for the Fibonacci retracements, although sticking to 38.2%, 61.8%, or even 100% is recommended.
The Momentum Strategy
In terms of the easiest Forex trading strategies for beginners, momentum trading might just be at the very top of the list, as it is hands down one of the easiest ways to trade. This type of trading is all about buying and selling currencies based on recent trends. Momentum is generally determined by the rate of price change along with trading volume.
This momentum strategy is based mostly on news releases, as well as trends which are supported by high trading volumes. When a trader uses a momentum strategy, it’s all about identifying a trend and betting that this trend will continue on in the same direction. Keep in mind that paying attention to economic and market news is vital to the success of this method.
Bollinger Bands Bounces
What is really cool about the Bollinger Bands trading strategy is that it allows traders to execute trades even in the total absence of trends. This particular strategy is a great one for a ranging market, which makes it a great way to deal with restricted ranges of price movements.
Of course, the main component of this strategy is the Bollinger Bands indicator. Here, it is used to form a limit for fairly short term price movements, thus helping you to identify great entry points.
Forex Trading Strategies for Beginners – Final Thoughts
We hope that we have been able to provide you with some easy Forex trading strategies for beginners that you can put to good use. Stay tuned because there is a lot more content on the way, all of which will help you become a much better Forex trader.