7 Forex Trading Strategies All Traders Should Know

Forex Basics

Did you know that Forex markets had a daily turnover of $6.6 trillion in 2019 and it continues to grow. The industry is booming and can be quite daunting if you’re a beginner. Luckily there are tips, tricks, strategies, and Forex education you can implement to help you get ahead in the Forex game.

So, keep reading to find out more about seven beginner-friendly Forex trading strategies.

Woman Trading Forex

 

1. Breakout Trading

Breakout trading is one of the simpler types of Forex trading and tends to be a good starting point for beginners. This trading strategy is a preferred method for many traders since it allows them to take a position at the start of a volatile period. The volatility matters since it offers more trading opportunities.

 

What Is a Breakout?

A ‘breakout’ is the term used when the currency pair’s price moves out of a consolidated range. Breakouts can occur when prices increase or decrease outside of the resistance or support areas. This strategy hinges on you opening your FX position very early and placing your stop-loss at the point the market broke out.

Forex Breakout Example

Breakouts signal the start of increased market volatility. By waiting for a break in a price level, you can jump on the trend as soon as it begins.

 

Why Use Breakout Trading?

By using this Forex trading strategy, you can enter the market as soon as the trend appears and ride the trade until volatility dies down. When it comes to this strategy, you can either dive at the moment the support or resistance level is breached, or you can wait a bit to ensure there is truly a down-trend.

 

2. Range Trading Strategy

This strategy is one of the less elaborate trading strategies out there. When a market consistently moves between two price levels, it creates a price range. Then within that range, you can identify upward or downward trends.

You can either manually trade within this range or set stop losses and limits on orders.

 

3. Momentum Trading Strategy

Momentum trading focuses on trend strength instead of the actual trend. This strategy is rooted in the concept that if a trend is strong enough, it will continue in the same direction (this can be an upward or downward trend!).

When using this strategy, you’ll open your position once you’ve seen the trend gaining momentum and close it when the trend slows down. Momentum is determined by volume, volatility, and timeframes.

 

4. Carry Trade

This form of trading looks to profit from the interest rate between countries. While this is a popular strategy, it can be extremely risky since these trades are often highly leveraged.

This strategy works by currencies being bought and then held overnight. The trader then gets paid the interbank interest rate of the country in which the currency was bought.

The trader using this strategy essentially borrows from a low-interest rate currency and then uses the funds to purchase a currency that provides a higher rate. When using this strategy, you’ll want to profit from the difference between the rates.

Common trading pairs include the Australian dollar – the Japanese yen and the New Zealand dollar – the Japanese yen since the interest rate spreads of these currency pairs are extremely high.

 

5. Trend Trading Strategy

This Forex trading strategy is one of the most widely used strategies in the industry. This strategy implements technical indicators to help identify the direction of market momentum and how long it has been going. Forex markets are generally expected to behave in a certain manner, and these manners can be forecasted by historical trends and movements.

Some popular indicators that can be used to identify trends in trading are moving averages (MAs), relative strength index (RSI), and average directional index (ADX).

 

6. Fundamental Analysis

When using fundamental analysis, you look at a country’s economic fundamentals to try and determine whether a currency is undervalued or overvalued. You can also use this information to try and determine how the currency’s value is likely to move based on another currency in the future.

These analyses can be extremely complex as it involves various elements of economic data that can indicate future trade and investment trends. It is, however, possible to simplify this by only looking at a few major indicators.

Some of the main factors that you can look at when doing an analysis are:

  • a country’s economy and currency
  • retail sales
  • GDP
  • industrial production
  • CPI
  • inflation

 

7. MACD Trading Strategy

MACD (moving average convergence divergence) is used to find the end of a trend and the beginning of another one. This is a great strategy to tie in with trend trading.

There are three parts to make up an indicator:

  • the MACD line
  • the signal line
  • the histogram

The MACD line is made by subtracting the 26-period moving average from the 12-period moving average. The signal line 9-period moving average. This then gets displayed as a histogram.

If the MACD line crosses above the signal line, it is seen as a buy signal, and if the line crosses below the signal line, it is a sell signal.

 

Forex Trading Strategies Made Easy

If you want some major help with these Forex trading strategies, you need to try our Forex training course and Forex signals. We at Premier Forex League are a close family of traders that teach you using our proven Forex strategies and Forex Signals.

Forex trading doesn’t need to be daunting. With the right skills and resources, you’ll flourish in no time. So take the plunge today to learn the system and master the trade.

Please don’t hesitate to contact us with any Forex-related questions or concerns you might have!

 

How to Spot a Forex Scam

Did you know that people lose over $5 billion every year due to fraud? While we may think this is the normal number, it’s actually on the rise. Social media and the digital economy have brought us many new opportunities. Unfortunately, it has given scammers new...

How to Trade Forex for a Living

The forex market is growing fast, with an average of almost $7 trillion traded daily by forex traders worldwide. While some people swear by it, some give it a bad rap and are quick to dismiss it. Frankly, forex trading isn't a get-rich scheme, but you can trade forex...

How To Trade Forex With $100

According to the Balance, traditional stock market traders need $25,000 to have a chance at becoming full-time day traders. Naturally, you don't need us to tell you that most people don't have 25 grand just sitting in their bank accounts and screaming, "Hey! Please...

Best Forex Indicators to Use When Trading

Forex trading is an incredibly profitable venture and side hustle, with the average trader earning about $48,274 every year. Top earners rake in amounts in the millions per year! However, forex trading isn't as simple as picking a currency pair and waiting for the...

What You Should Know About Forex and Crypto Trading

It seems like new ways to trade and invest pop up all the time. And recent years have added some new spice to the world of day trading, especially with the growth of cryptocurrencies as a serious contender. It all started with Bitcoin in 2009, a strange new innovation...

The Ultimate Guide to Forex Trading Signals

The cryptocurrency market just reached a $3 trillion valuation. The global stock market is worth around $85 trillion. But the forex market blows these out of the water. More than $6 trillion is traded daily on the forex market, with an overall value of $2.4...

Finding “Your” Best Forex Strategy

Finding the best Forex strategy is an essential aspect of Forex trading. Various Forex trading strategies are developed and set by successful traders to maximize the profits from currency trading. We can't state that "this particular" method is proven to increase the...

Forex Trading Tips That’ll Help Beginners Hit the Ground Running

Let us start by saying this: Forex trading is not a scam! The absence of understanding the economy and the persistence of those who are current traders lead people to believe that Forex is another pyramid or get rich quick scheme. Although Forex trading is now...

Swing Trading: What Is It and How Does It Work?

Swing Trading is an intermediate trading style used in the Forex market. In swing trading, the trader stays in his position for more than a day. i.e., a trader may remain in his position for days or weeks. Swing traders receive great benefits during big announcements...

How To Trade Forex Using A Bias

​I decided to write a short article on trading Forex using bias with our Forex signals and bands. This Forex trading Bias is mainly used for short-term Forex trades but can still be utilized in long-term trades. Checking these five items off your trading list each day...

Your Subscriptions

  • You are not logged in.

Latest Testimonials

forex trading quote circle

I found this class by accident. I was already doing some forex and binary when I found MT’s site. Getting texts when to buy and when to sell from the other service I was using was a complete joke.  I couldn’t stand the waiting and wondering if we were getting a text or not. It always made me wonder where are they’re getting the signals. How did they know this and why wasnt it more consistent. One thing for sure they did put alot of hype to get you too join.

Then I found a video of MT’s session…Read More…

BR

Master Trader

forex trading quote circle

In early 2015 I was searching for a second income, an extra wage to help pay the bills. I’d had a go at MLM but found all the extra work time consuming. I started looking into binary options and in doing some research I came across a BOTS review. Straight away I was impressed but wanted to do some more research and over the next couple of weeks I found myself drawn to the site on a few occasions and in May 2015 I decided to give it a go. Read More…

Jasfran

Master Trader

Newsletter

winning mindset | cheatsheet | forex signal room | premier forex league

Premier Forex League logo 125px

Receive 4 Bonus Gifts!

Limited quantities! Enter your name and email for guaranteed delivery.

 

You have Successfully Subscribed!

Pin It on Pinterest