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Useful Forex Trading Strategies

In Forex trading, there are generally three essential factors to master. They are mind, money, and method. However, your method, an integral part of your trading plan, is arguably the most important of them.

Which trading strategy do you want to adopt? What is your appropriate trading style? Those are methodical questions.

Your method will be fundamental to your trading success or otherwise. But all the three are bricks that you must combine to be able to build a profitable Forex trading business.

Here, we will talk about method.

Forex Trading Strategies That Work

As stated earlier, there is no sure-fire almighty trading strategy. As long as you thoughtfully formulated and back-tested it, it is enough. However, it is vital that you consider your personality in deciding your trading strategy — your method.

There are trading styles according to different time frames and the duration of positions held.

Therefore, depending on your personality, risk tolerance, and individual preference, you can select any of them. The different styles of trading are:
  • Scalping
  • Day Trading
  • Swing Trading
  • Position Trading
Scalping is the fastest of the four trading styles. Scalpers enter and exit trades within short time frames. They thereby hold positions for as quick as one second but hardly later than a few minutes.

Principally, scalpers use tick charts. Also, they aim to take some pips off each trade. They expect those small profits made on each trade to add up to a significant value in the long run.

Day trading, perhaps, is the most popular of the four of them. Probably, more people use this style than any other of the four. Day traders enter and close their trades on the same day. With this trading style, there is no allowance for keeping trades overnight. Because of its relatively low risk, popularity, and profitability, most beginners usually find it attractive.

Swing trading takes longer than scalping and day trading. It typically takes some days to weeks.

Position trading, however, is the longest. Position traders hold their positions for months to years. Of the four trading styles, position trading resembles investing the most. Position traders also usually combine fundamentals with technical tools in their trades.

You should note that the longer the time frame, the less monitoring your trades will need. Also, usually, risk reduces with increasing time of holding positions.

Popular Useful Trading Strategies

As we have pointed, there are many strategies for trading Forex. Broadly, they fall into categories such as trend-following, counter-trend following, and time-frame strategies. They are not mutually exclusive: many principles are similar among all of them.

For instance, because of the relatively long time frame, Forex Daily Charts Strategy can capture some of the best trades. It works on three basic principles:
  • Identification of market direction. You do this by locating the trend. Is it an uptrend or a downtrend?
  • The longer the time frame, the more patience you need. When using daily charts, you should be disciplined and focused.
  • Most traders fail due to over-leverage. Hence use less leverage and more considered stop losses.

Another strategy is the Forex EMA Trading Strategy. You can use this simple but powerful strategy to trade EUR/USD, USD/JPY, GBP/USD, and AUD/USD easily.

In using it, you should always look out for two conditions. First is the exponential moving averages (EMAs) indicator, specifically the 5 and 20-period EMAs. Second is the crossing of one of the EMAs over the other.

The 5-period EMA represents the short-term moving average. The 20-period EMA, on the other hand, is the long-term one. The crossing of the long-term moving average by the short-term one usually represents a reversal in trend and presents good trading opportunities.

For instance, to enter a buy order, you should make sure that the blue line, the 5-period of the EMA indicator, crosses the red line, which often represents the 20-period EMA, from below.

However, before you enter a sell order, you should have seen the blue line crossing the red line from above.

Scalping, despite its fast tempo, can be very profitable, too. However, because of the ultra-short time frame, you should choose your indicators carefully. Moving Averages and Parabolic SAR (“Stop and Reverse”) are some of the best Forex indicators for scalping.

1000Pip Builder: We Can Build Your Trading Success!

Finally, no matter the trading strategy you choose, reliable trading signals could significantly increase your chances of success. 1000Pip Builder is one of the leading Forex signal providers.

1000Pip Builder is committed to seeing you succeed at Forex trading. Thus, a membership plan with us will go a long way to boost your chances of Forex trading success.

Hence, you should sign up for a membership plan with us here.