There are about as many different Forex trading strategies designed for both beginners and professionals as there are traders on the market. This is hardly a surprise, considering the number of various factors which are involved in creating a trading strategy. In practice, there is no single strategy which can cover every market condition, every price formation and every different case that you may possibly encounter. This article describes some different Forex trading strategies, and as a beginner to the Forex market, it’s not your job to learn or memorise all the different strategies – instead, you should take the time to understand the different underlying principles on which they are based.
Breakout trading is an example of a beginner Forex trading strategy which isn’t particularly time-consuming. However, this strategy can be a bit of a challenge to traders who lack patience and concentrate on present outcomes rather than focusing on delayed gratification and future results.
The right market conditions are crucial, which is why as traders, we should know exactly what we’re looking for before we look at a chart. This skill will enable you to analyse any charts quickly with little risk of overlooking anything, no matter how simple or difficult the strategy you’re using is.
When breakout trading, there are three different steps – setting, entry, and exit. The setting is a ranging market, and you should enter in the breakout direction at certain times. Conditions for exiting a trade are just as important as when entering.
Spread betting is becoming a more and more popular strategy for those who aren’t yet ready to become a fully-fledged trader, but still want to make some money on the Forex market. Spread betting is a strategy that allows you to place bets on whether a market will increase or decrease in value, and depending on how you have bet you will either earn or lose money.
Although it works in a similar way to trading, the beauty of spread betting for beginners to the market is that since it’s a bet, you never actually own what you’re trading. Unlike other strategies, you don’t need large sums of money to get started either, meaning that it’s a fantastic way to have a go and decide whether you think Forex trading will be for you. See these reviews of different spread betting platforms to see which is best for you.
The carry trade strategy is a lot different from most other strategies for beginners. Carry trading does quite well in ranging markets, and is not as focused on volatility. This makes it a strategy that takes a longer amount of time to make a profit, however barely any time is required in order to manage it.
In carry trading, the trick is to find low-volatility currency pairs with the largest interest rate differential. The logic of this strategy is further supported by the economic theory found in the fundamental analysis textbook.
Which strategies would you recommend to beginners?