Follow 7 Tips on forex trading for beginners
Forex trading or currency trading is the buying and selling of foreign currencies or currencies. It is a volatile market and can be very challenging for new investors and traders.
The huge risk is that the forex market depends on news and events, but events not be recognized because the currency trade in pairs.
A similar event can positively affect both pairs of currency, and cannot be predicted.
It is required to understand how to start forex trading or build the right strategy for trading.
To manage the risks, investors use a good forex trading strategy. so that they can accurately identify the key points to invest in and exit the forex market and the best times to do so.
Similarly, It depends on technical analysis, in which the past trends of currency prices and their behavior are studied to predict the future.
A better forex trading strategy will help you determine which currency pair you should trade, the size of each position that controls the risk of your trade, and the entry point, exit point, and specific techniques to implement your strategy.
Let us explain seven successful Tips on forex trading for beginners.
1. Price Action Strategy
It is one of the easy and most used forex trading strategies.
It is based only on price action and no indicators or techniques. The premise of this strategy is that forex trading is based on price action – bull and bear.
The price action strategy is to understand whether the current prices are being controlled by bulls or bears and then take action accordingly.
If the trader’s analysis says that the market is under bull control and is likely to remain in control, they should buy and sell if the market is under bear control.
The trader should use methods such as support resistance and candlesticks.
The biggest strength of the price action strategy is that it works in all market conditions, whether it is trending (trending), volatile (volatile), or less volatile.
An example of a price action strategy is the Bladerunner strategy which uses candlesticks, pivot points, round numbers, and support and resistance levels.
2. Trend Trading Strategy
Trend trading is one of the most successful Tips on forex trading for beginners. As the name suggests, this strategy involves identifying and following the trend.
The trader knows whether the price movement of the currency is up or down and should then select the entry point.
To identify the direction of the trend, traders can use tools such as moving averages, stochastics, relative strength indicator (RSI), and others.
This strategy is used by beginner traders as it’s not difficult to identify trends using specialized tools.
Even if the trader does not know the exact timing of a trend, he can enter the market at the earliest and make good profits.
This strategy helps a trader to get out of this position and guides them in the right direction by pips.
Currency prices are influenced by the trends of global events like inflation, interest rate policy, and government policy.
That’s why a trend-based trader needs to keep an eye on the news from around the world so you can take advantage of it.
3. Counter-Trend Trading Strategy
Counter-trend trading is one of the most successful forex trading strategies. This strategy is useful in the beginning, as it helps to build confidence due to the high success rate of the trader.
Its basic premise is to change the trend. A breakout strategy does not move into a long-term trend.
When the trend reaches its peak, it is expected to correct soon. This approach can be more challenging than the following approach.
An opposite trend can be much more challenging than predicting a trend because the markets are very volatile and can take any direction at any time.
4. Range Trading Strategy
Range trading is one of the most popular currency Tips on forex trading for beginners. It involves trading within a fixed and predictable range of currency prices. The premise of this strategy is that prices stay within a range for some time.
Identifying price points is essential for this strategy to be successful. That is, when the traders stop selling, then the buyers should buy.
These price points are related to the level of supply and demand for the currency shown by support and stability.
The trader buys the currency and expects the price to move to the longer-term average. Range traders mostly buy or sell a currency at predictable high and low prices of support and resistance.
Some technical tools like the relative standard strength index, stochastic, and support resistance.
This strategy is most effective for economies stable and affected by news events.
5. Breakout Trading Strategy
The trader goes to the market at a time when the market is outside its previous trading range.
If the price moves higher than the previous resistance level, the trader can expect the price to move higher by entering this breakout point and if the price crosses the previous support level, the trader can expect the market to go further down. Hopefully can sell at that time.
Before the price moves up, there is a level of consolidation where prices stay in a stable range and at times come at support and resistance levels. Just before the breakout, when the trader wants to enter or exit the market.
The breakout trading strategy becomes very attractive to the forex trader, as the market is prone to high volatility and breakouts, both real and unreal.
The forex trading market is known for high volume trading by supercomputers with fake swings.
These breakouts work effectively for many traders.
6 Position Trading Strategy
One of the long-term currency Tips on forex trading for beginners is the position trading strategy. This strategy does not work intraday or short-term, but on a long-term basis for weeks, months, or years.
As for the position trading strategy, traders can take positions based on the macroeconomic trends of the economies in the long run.
They can keep their leverage and lot size low, as long as there is an attempt to make big profits from the high prices over a long period.
The position trading trader needs to have a good understanding of fundamental analysis and importantly be patient with more capital to trade, as this strategy does not give immediate profit to many people.
Traders must perform fundamental analysis and look for macroeconomic trends and use technical indicators to determine entry and exit positions, and then wait for favorable results.
Therefore, the position trader must have a thorough understanding of the fundamentals. However, position trading is also beneficial because it does not cause daily stress due to low price volatility and is less risky and more rewarding in the long run.
7- Carry Trade Strategy
Carry trade is one of the unique currency Tips on forex trading for beginners.
Under this strategy, traders take advantage of the interest rate difference between the two countries whose currency is being traded to take advantage of currency price movements.
Ideally, when a trader buys a currency and places it overnight, he pays an interest rate according to the bank of the currency’s country.
Therefore, to get additional profit, the trader trades and sells the currency of the country with the lower interest rate and buys the currency of the country with the higher interest rate and profits from the difference.
This strategy mainly accompanies a trend trading strategy to maximize profit.