You can read more about technical indicators by checking out our education section or through the trading platforms we offer. The best forex trading strategies for beginners are the simple, well-established strategies that have worked for a huge list of successful forex traders already. Through trial and error you should be able to learn Forex trading strategies that best suit your own style. Go ahead and try out your strategies risk-free with our demo trading account.
Forex traders evaluate currencies and the countries much like how equities and companies are evaluated to get a clear idea of the currency’s value. The value of a currency changes due to many factors such as economic growth of the nation and its financial strength. All this information is analyzed by the forex traders to evaluate the value of its currency. Fundamental trading strategies cannot be easily mastered by a newbie forex trader. Given below are some trading methods that use fundamental analysis.
To what extent fundamentals are used varies from trader to trader. At the same time, the best FX strategies invariably utilize action. This is also known as technical analysis. When it comes to technical currency trading strategies, there are two main styles: trend following, and counter-trend trading. Both of these FX trading strategies try to profit by recognising and exploiting price patterns.
If traders are positive on the prospects for the Yen, they would expect the number on the right to go down – i.e. the Yen would be getting stronger against the Dollar. Traders would be buying less Yen with a Dollar as the Yen got stronger. Similarly, if the Yen was expected to weaken, forex traders would expect the Yen number to go up, reflecting the fact that the dollar could buy more yen.
Forex Factory is an online foreign exchange trading platform that connects traders and brokers. The brand also offers a lucid interface with lots of unique features for news-based trading. The platform is highly social and it connects its users through a private members’ forum where you can share your ideas and trades. Forex Factory features simple spread-charting with data sourced from multiple brokers all over the world. It offers trading in all major currency combinations.
As there is no opening-closing time for forex trades, users can view different time zones on specific charts. Even though the charts are continuous, there is a side bar that divides different trading sessions based on four time zones; Sydney, Tokyo, London, and New York. The charts also carry a time-graph of Breaking News Impacts and Calendar Events that are helpful to judge the impact of global news on forex markets.
However, it's important to note that tight reins are needed on the risk management side. These Forex trade strategies rely on support and resistance levels holding. But there is also a risk of large downsides when these levels break down. Constant monitoring of the market is a good idea. The market state that best suits this type of strategy is stable and volatile. This sort of market environment offers healthy price swings that are constrained within a range. It's important to note that the market can switch states.
Entry points are usually designated by an oscillator (RSI, CCI etc) and exit points are calculated based on a positive risk-reward ratio. Using stop level distances, traders can either equal that distance or exceed it to maintain a positive risk-reward ratio e.g. If the stop level was placed 50 pips away, the take profit level wold be set at 50 pips or more away from the entry point.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.