There was a day when Forex trading was a fringe activity practiced by relatively few people. We’re here to tell you those days are long gone, and everyone can get into online forex trading easily! There is a lot of free information to absorb, knowledge to be gained and many forex brokers actually put a lot of effort into educating their traders to succeed. Many people made forex trading their day-job and never looked back! Read below what we consider to be the top 5 forex trading strategies for beginners and how to benefit the most from them.
The main tools that are used in developing forex trading strategies are technical analysis and fundamental analysis. While a technical analysis will consist of charts and technical tools to predict the future market prices, a fundamental analysis is based on macroeconomic and political factors that can directly influence the exchange market. For a more in-depth guide, we recommend a prime Forex brokerage firm like RCPro.com who provides an outstanding educational center.
The support and resistance trading strategy is based on the price lows and price highs in technical analysis. Support indicates the chart position where the buying interest is very strong and surpasses the selling pressure. The resistance level represents the chart position where selling interest is higher than buying pressure. A good support and resistance strategy is based on realizing how these chart positions can indicate market trends.
The forex trend trading strategy is focused on studying the evolution of charts including market trend, volume, range, indicators and many other technical tools to identify the market trend. A Forex market trend is composed of a series of highs and lows that can help determine the trend’s type: uptrend, downtrend or sideways. Each type of trend should be approached with a different strategy. When the market is up trending it is recommended to buy, down trending will probably demand you to sell and sideways trending means you should stay aside.
A position trading strategy is an approach where you can hold trades for long periods of time and rely mainly on fundamental analysis to determine when trends are changing. This strategy of long-term trading requires patience but there’s nothing quite like correctly predicting an upward trend and buying right at the start of it. However, short-term trading became more and more popular and it’s a pity that they don’t even take it into consideration, as it’s the most profitable kind of trading.
In order to hold the strongest trends for a long period of time, you can do some research and choose between one and four currency pairs to trade, cut your losing trades short and let your winning trades run!
The forex range trading strategy is used when the market lacks direction and trends are absent. It identifies the currency price movement in channels and finds the range of highs and lows of that movement. This is a safe strategy as long as the market has enough volatility without breaking of out the determined range.
The trade by indicators strategy uses technical indicators based on the price and volume of a security. They can confirm the trend and help determine what buy and sell signals to use. Technical analysis indicators can be applied separately or together, in conjunction with the market. Not all of them are widely used though and knowing how and when to use them is the key to best use this strategy.
Do you know what Leonardo Da Vinci said about simplicity? He said that it’s the ultimate sophistication and in this case, his words are very accurate. If you’re just getting into the trading game, try to keep it simple and stick with the approach which better suits your level of experience while using this trading strategy. There are four easy indicators you should know by heart: Moving average, Moving Average Convergence & Divergence (MACD), Relative Strength Index (RSI) and Slow Stochastic.
The Forex trading world has developed quite a bit, and there is a lot to learn if you want to become one of the best. Fortunately, many forex brokers offer extensive financial education and can help you succeed in the world of forex trading even as a beginner. If you ever wanted to become a forex trader but were too afraid of being overwhelmed, this is a good time to start investing in yourself and get trained by professionals.
If you are interested in even more business-related articles and information from us here at Bit Rebels then we have a lot to choose from.
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