Forex trading is exciting, to say the least. If you make the right calls you can easily multiply your investments manifold. But like all other kinds of trading, it has its pitfalls that you will need to avoid those as you go along the way. If you tried your hands at trading in equities you might think it is similar to that. But the fact remains it is a tougher challenge to understand the strength of a currency vis-à-vis others compared to analysing the stock market. This is where technical analysis becomes vital for Forex Trading Strategies. As a beginner, you will come across dozens of strategies some of which can be tough to comprehend.
Best Forex Trading Strategies
Here we take a look at top five Forex trading strategy for beginners that will hold you in good stead during your trades –
Pin Bar Trading Strategy
This is among the most popular Forex trading strategy for beginners because a pin bar chart is among the easiest to read. If you have never been involved in any kind of trading before you need to try this strategy. By getting used different elements in the chart such as the upper and lower ‘tail’, the ‘wick’ what is also called a ‘shadow’ and the ‘body’ as well as ‘real body’ you will be able to spot the direction of the currency as well the bullish or bearish trends in the market.
Moving Average Strategy
Moving averages are one of the best indicators on which direction the wind is blowing. This strategy is often used by beginners who are willing to play a patient game and wait for the right time to enter or exit different currencies. This strategy is based on a statistical analysis of the average value of trades over a set period of time. It most cases it is a summary of the weekly data that covers a period of one year. This strategy often gives you a macro picture of the Forex market. It is one of the most used forex trading strategies and it is easier to understand compared to others.
Inside Bar Forex Trading Strategy
Compared to the Pin Bar Trading chart this is considered to be a more comprehensive Forex Trading Strategy that offers deep insights into the upcoming price movements. In this chart, you will see a multi-bar pattern where there are two bars with the major bar known as the ‘mother bar’ and the inside bar. There are instances where there are multiple inside bars along the mother bar. By understanding the pattern of these bars you will be able to identify the right entry and exit points allowing you to multiply your gains and at the same time minimize your losses.
This is one strategy that seems to have become very popular in recent years. This is meant for those who are interested in short-term trading in currency. As in equity markets, the currency markets have also bids and offers. The gap between this is known as the spread and this where traders employ the Scalping strategy. Here your aim is to beat the offer and bid spread and book a thin profit in share market by trading in between. This is reverse to long term trades where you will target a sizable profit with your bids and offers. This strategy is more employed when the selected currency is on a downward slide.
Position Trading Strategy
This strategy is in complete contrast to the Scalping strategy where traders hold on to their positions for days and even weeks to achieve their targets. In this Forex Trading Strategy, you will need to study the fundamental factors that are driving the market. You will need to keep an eye on the macro factors such as the geo-political situation in the world and political stability in the country of the currency’s origin. Based upon these you will have to work out your entry and exit strategies.
To sum up, this Forex trading strategy for beginners has helped thousands of people take the right steps into the Forex training market. They not only help you multiply your investments but also help you in avoiding the several risks that are associated with this highly volatile market.
About Author – Mark Root is an ace investor who has been in Forex trading for many years and also runs courses for beginners. He keeps an eye on the most popular Forex trading strategies in the market and writes about them on a regular basis.