Don’t want to get stuck on losing forex trading strategies for years on end? I’m serious – that really happens for some people. But it’s okay because if you’re looking for the best forex strategy, you’ve come to the right place, my friend.
Forex trading is incredibly exciting. There are two key fundamentals that will help you enjoy more success from it:
- Patience
- Strategy
Both aren’t easy to come by (especially if you’re a naturally impatient person). However, if you can pick the right forex trading methods that work for you, you’ll be able to refine your own set of rules so that you start eliminating your losing trades while focusing on your winning ones.
Sound good?
In this article, we’re going to cut through the noise with a detailed guide on the best forex strategies that can help you take your trading game to the next level.
Positional Trading – Best Forex Trading Strategy For Long-Term Gains
Positional trading requires diligence and patience from you, as your positions will be open for an extended timeframe. This allows you to catch some pretty hefty market shifts. The golden rule is to ignore high leverage while keeping track of the currency swaps.
If you don’t, these costs will cost you more than your profit.
Positional trading is a forex strategy that teaches you key forex trading methods and skills, as well as the skills needed to make a success of this. It’s a good way to achieve those high profits we want – but the downside is that it’s emotionally draining at times. This is because short term moves have the power to put a serious dent in your funds. Traders who can’t deal with losses or stress very well will be tempted to close when losing these short-term points.
Trust me, I’ve been there. But if you’re prepared to analyze the market for hours on end, you’ll soon learn how to more accurately predict potential market moves.
Moreover, the biggest benefit (in my opinion) of the positional trading strategy is that you spend very little time actually executing the trades (because they’re longer-term). If you can handle the stress that may come from the short-term shifts, this strategy can work for you.
That said, a very wide stop loss means you’ll need a big capital base before you start out with this forex strategy.
Scalping – Best Forex Trading Strategy For Accruing Small Profit Margins Over Time
I love the name of this one – but I’m personally not cut out for it.
The biggest problem with scalping is that it’s time-consuming and it can suck the life and fun out of forex because the profit margins are often tiny despite the hefty work involved.
So why’s it here? Because if you get it working, it pays very well in the long-term.
Moreover, it’s a reliable, safe and profitable forex strategy that anyone can get into.
The scalping strategy allows you to pop in and out of the market a few times a day before taking your position into the next period. If you’re savvy, the profits will come.
The scalping strategy is also less frenetic than most others. The profit margins are steady, too. On the other hand, they’re also small BUT if you keep scalping, you will make more money.
Not just that, but scalping profits are often accrued in the space of a minute. So if the price of your currencies keep jumping, say, 20 pips, and you keep scalping all day long, you could end up with a tidy if not outlandish reward.
Swing Trading – Best Forex Trading Strategy For Medium-Term Trading
If you’re looking for a medium-term trading strategy that works, swing trading is my top pick. It lets you hold your trades for weeks on end, and your aim is to use your knowledge, skill and diligence to catch those single moves in the market.
Or, swings.
With the swinging strategy, you’ll be looking to trade pullbacks, as well as breakouts; sell resistance and buy support. For this reason, the swing trading strategy means you’ll need to first spend a lot of time learning technical concepts such as candlestick patterns, support and resistance and moving average.
There’s quite a lot to learn before you begin swing trading but the beauty of it is that it can be done as a side hustle. In other words, you don’t need to spend hours and hours glued to your screen, and thus you can keep your current job. On the other hand, overnight risk is a factor that will put some unseasoned traders off.
But overall, swing trading is one of the best forex trading strategies you can implement.
Range Trading – Best Forex Trading Strategy For Technical Analysis
If you’ve got some technical knowledge – or if you’re prepared to pick up some technical knowledge – the range trading forex strategy could be one that you pull off well.
To make it work, you have to identify those support and resistance points where you place your trades around the key levels. It’s a solid strategy in markets without any discernible trends or much volatility.
However, breakouts are the name of the game, so you need to be good at managing risk. You should also aim to close current range bound positions, while using oscillators as your timing tools is recommended.
Other than that, while the risk-reward ratios are pretty high with range trading, the amount of time investment per trade is also pretty high. As mentioned, you also need to be good with technical analysis before plunging into this forex strategy.
Day Trading – Best Forex Trading Strategy For Short-Term Trading
Perhaps the most popular (or at least well-known) of all forex strategies is the day trading strategy.
When I first got into trading, I talked to a lot of day traders who seemed to be doing pretty well.
However, what I soon learned was that day trading requires you to be on the ball because the pace is pretty fast. Sometimes, you’ll hold a trade for a minute or two, sometimes you’ll hold it for a few hours.
The aim of the game with day trading is to catch the intraday volatility, wherein trading the highest volatile session of your instrument is key to your success.
The major pro of day trading is that you don’t need to spend time getting to grips with the in’s and out’s of the economy. None of that stuff will bother you because all you need to identify is your bias for each day. You’ll go either long or short.
Day trading is a forex strategy that has proven to be very profitable for traders who take the time to get good at it. Money can be made each month and there’s zero overnight risk.
On the other hand, it takes hours and hours of dedication and you’ll find yourself spending most of your day watching the markets. For some, that won’t be much fun.
Summary
Whether you want to become wealthy, or whether you just want to either supplement your existing income or turn forex trading into a full-time job will dictate which forex trading strategies are right for you. I’ve given you the options and highlighted the best ones for different types of traders. If you’re looking to turn trading into a paycheck, it’s a good idea to go for the short-term strategies, such as day trading.
On the other hand, positional trading and other medium-to-long-term strategies are the ones to go for if you want wealth.
Whichever you choose, you have my best wishes. Just make sure to brush up on technical analysis, put the hours in and – if you’re entirely new to this and don’t want to lose everything straight away – place some virtual trades first.