Discipline is a key forex trading feature that many traders struggle with. To remain disciplined while trading forex, you will need a robust trading strategy. Read on to understand some of the best forex trading strategies you can use.
Choosing a Forex Trading Strategy
To choose the ideal forex trading strategy, you should consider your experience level and personality. Remember, there are no universal trading strategies, and what works for one person may not work for you. You want to experiment with different strategies before you can identify what works for you.
Experimenting helps you eliminate what does not work for you. Before choosing the right strategy for your forex MetaTrader trading platform, you want to consider your trading style and timeframe, which include:
These are short-lived trades that a trader holds for a few minutes. A scalper tries to beat the offer/bid spread quickly and get a few percentages in points (pips) of profit before leaving. Scalping is among the most advanced foreign exchange trading strategies.
It utilizes minimal time frame charts like the ones in the forex MetaTrader 4. This forex trading platform also provides some of the ideal foreign exchange indicators for scalping.
Swing trading involves positions that traders hold for some days, where traders seek to gain profit from limited price patterns. Some swing traders look for tables every half an hour while others do so after every hour.
Day trading involves trades that traders must exit before the day ends. Trading forex during the day eliminates the risk of being severely affected by massive moves overnight. Beginners usually use day trading strategies. In this case, trades can only last a few hours, while traders can configure price tables on charts to one or two hours.
This forex trading style is a long-term trend that seeks to leverage major price shifts to increase profits. Using positional trading strategies requires ultimate discipline and patience. You will also need great knowledge in terms of market fundamentals.
Top Forex Trading Strategies you can Try
50-Pips a Day Forex Strategy
This strategy relies on the early market influence of specific overly liquid currency pairs. It is ideal, especially if you are using the EURUSD and GBPUSD currency pairs. When candlestick closes beyond 7 am GMT, traders place two different orders or two positions. If the price movement activates any of them, then the other position is canceled automatically.
The profit mark is set at 50 pips, while the stop-loss order is put in between 5 and 10 pips, below or above the 7 am GMT candlestick after its composition. This action is enforced to help manage risk. Once these conditions are set, the market will do the rest.
Scalping and day trading are short-term forex trading strategies. It is worth mentioning that presents more risk since more trades will be taken. In this case, a trader will need to have an effective risk management strategy.
Daily Charts Strategy
Some of the best forex traders opine that daily charts are better than short-term strategies. Daily charts can give you more than 100 pips per day because they come with longer timeframes.
Daily trade signals are usually more reliable compared to lower timeframes. They also present a greater profit potential even though they offer no guarantee during trading. Traders should not be worried about daily news and irregular price movements. This strategy is founded on the following principles.
This principle requires patience, and you will need to eliminate the need to enter the market immediately. You will have to stay away and spare your capital for a large opportunity.
Locating the Trend
Markets trend and combine, and the procedure repeats itself in cycles. The initial standard of this style is to determine the lengthy moves in the forex market. Traders can establish a forex trend by evaluating the 180 durations of forex data. The next step involves recognizing the swing lows and highs. Assigning this price data on the prevailing charts helps a trader to determine the market direction.
Larger Stop Losses and Less Leverage
Understand the large intraday fluctuations in the market. Using larger stops does not amount to risking large amounts of capital.
It is crucial to understand that trading involves losing and winning, and there will always be risks involved. Remember, sometimes your loss will be more than your initial capital, and no trading strategy can give you overnight riches.