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Various Types of Forex Trading Strategies

forex strategiesThe difference between a successful Forex trader and an unsuccessful one is the quality of the strategy they use. If you want to be successful, then you need to develop a good Forex trading strategy. A lot of things need to be considered when developing Forex trading strategies. You need to consider your peculiar trading style and expectations. A beginner may find it difficult to choose a Forex trading strategy. The information we provide here can help you to make the right choice.

Brokers that offer best Forex strategies

Forex Brokers Min. Deposit Platforms Rating Secure Link
1 BlackBull Markets
Risk InformationYour capital is at risk
$200
MT4, MT5
VPS, API
5/5 Visit Site
Regulators: FSPR, FMA, FSA
2 easyMarkets
Risk InformationYour capital is at risk
$100
Web platform, MT4
Mobile app
4.9/5 Visit Site
Regulators: CySEC, ASIC, FSA-Seychelles
3 fpmarkets
Risk InformationYour capital is at risk
$100
MT4, MT5
WebTrader, Iress, VPS
4.8/5 Visit Site
Regulators: CySEC, ASIC
4 Avatrade
Risk InformationYour capital is at risk
$100
MT4, MT5, Web, Mobile
AvaTrade Go, MQL5
4.8/5 Visit Site
Regulators: ASIC, FSCA, B.V.I FSC, FSA
5 FXChoice
Risk InformationYour capital is at risk
$100
MT4, MT5
Mobile Trading
4.7/5 Visit Site
Regulator: IFSC

Price action strategy

This strategy has to do with the study of historical prices. This will help you to formulate technical trading strategies. You can use price action as the only strategy. You can also use it together with some other Forex trading strategies.

Price action strategy

Price action does not involve fundamental analysis. It is purely technical. Be that as it may, some traders do add fundamental analysis to their price action strategy. Those who can use this start are:

  • Short term traders
  • Medium-term traders
  • Long-term traders

You can also use any timeframe for that matter when using the price action strategy. You need to develop an entry and exit strategy. Some of the methods you can adopt to enter and exit a trade are:

  • Oscillators
  • Indicators
  • Trend identification
  • Candlestick wicks
  • Fibonacci retracement

Range trading

This is one other worthy strategy among the available Forex trading strategies. In this strategy, you need to identify the support and resistance before making a trading decision. You can place your trades around these areas of support and assistance.

Range trading

The best time to use this strategy is when there is less volatility in the market. It is the best strategy when the trend is not discernible. Traders using this strategy focus on technical analysis to make trading decisions.

The strategy can work within any timeframe. You need to have a good risk management plan to make this strategy profitable. This is because a breakout can occur at any time and spoil the trade. You can predict a perfect entry and exit point by suing oscillators. Good examples of these tools are:

  • Relative Strength Index (RSI)
  • Commodity Chanel Index
  • Stochastic Oscillators

You can use price action together with this strategy also. Price action can help to validate the range-bound breakouts or signals.

Trend trading strategy

This is yet another outstanding strategy to consider Forex trading strategies. The strategy requires that you follow the trend to trade Forex. The strategy can be used by traders with different experience levels. All you need to focus on is the directional momentum of the market.

Trend trading strategy

The range of trading can be long term or short term. The trader can also analyze the market across several timeframes. The trader can identify entry or exit points by using oscillators. Examples of oscillators you can use for this purpose are:

  • CCI
  • RSI
  • Etc

You can make more out of this strategy by adding a good knowledge of price action to it. For example, the knowledge of price action can tell you when a reversal is about to take place. You can know this by using the specific shapes of candlesticks. This is one of the most popular of all Forex trading strategies. A common saying in Forex trading is that “Trend is your friend”. The trend trading strategy will bring so many trading opportunities. Its risk-to-reward ratio is also favorable. However, you will need to invest a lot of time before you can detect entry and exit points. You will also need to know a lot about technical analysis before you can use this strategy.

Position trading

It is one of the best for those looking for long-term Forex trading strategies. It is focused mainly on the use of fundamental analysis. Be that as it may, some traders also use technical analysis for trading the strategy. A good example of technical analysis you can use in this regard is the Elliot Wave Theory.

Position trading

This strategy does not give attention to smaller fluctuations or movements in the market. This is because such smaller fluctuations do not affect the bigger market picture. The strategy is good for Forex trading. You can also use it in several other markets, like stocks trading.

As we mentioned earlier, this strategy is a long-term Forex trading strategy. Those who use it usually leave their positions open for weeks, months, or even years. You can only use this strategy if you are a patient trader that is ready to persevere. Before you can use this strategy, you need a good knowledge of fundamental analysis. You will also find technical analysis knowledge to be helpful. You will need to know how to identify key levels on longer time frames. You can use technical analysis to determine your entry and exit points when using this strategy. The strategy may not be the best for a beginner. You need a good understanding of the Forex market for you to be able to use it conveniently.

Conclusion

The Forex trading strategies above are just a few of the many available Forex trading strategies. As you can see, the type of strategy you choose depends on the type of trader you are. This means that long-term, medium-term, and short-term traders will need different types of strategies. So, you need to first determine the type of trader you are before you pick any Forex trading strategy. Most beginners prefer short term trading strategies, however.