Forex trading is not just about buying and selling various currencies or hoping to make a profit or have a good deal. Just as your good old shares/stocks trading, this type of trading comes with strategies as well.
On top of that, such strategies are not aimed specifically at Swing, Scalping, Position, and Day traders – everyone could use them and, if used properly, they can turn into a goldmine.
For example, even if a strategy comes with things that a scalper would do, that doesn’t mean that a position trader can use it in order to get some advantage on the market.
Therefore, let’s take a look at seven different types of Forex trading strategies that you should know if you want to become a good trader!
Forex Swing Trading Strategies
With swing strategies, you don’t have to respect the long-term trends that swing traders do. This is because, with such a strategy, you can set your own target, and when you reach it, you can simply withdraw, with no risks.
Forex Renko Chart Strategies
A Renko chart is based on prices that surpass the top or the bottom of a previous brick by a pre-determined amount. When this happens, a brick ust be placed in the next column. Black bricks are used for downtrends, while white ones for up trends.
Forex Candlesticks Strategies
Candlesticks are considered by many as a very powerful technical analysis tool. Many times, they are used as the default when it comes to charts. There are roughly 100 candlesticks and candlesticks patterns on the market that can also help you to understand all the other strategies that are based on charts. Candlesticks are the powerhouse of Forex trading.
Forex Support and Resistance Strategies
In trading, a support zone implies that there are more buyers than sellers. Therefore, here prices tend to increase in value. Naturally, the resistance zone is the opposite of a support zone – more sellers than buyers and the prices drop. Therefore, you’ll have to identify the two zones, research them, and then buy in the resistance one and sell in the support one for guaranteed profit.
Forex Chart Patterns Strategies
The two most common chart patterns that you have to know are head and shoulders and triangle. The latter occur commonly in short-term periods and can be ascending, descending, and symmetric. The former comes with an uptrend that causes a topping formation.
Forex Breakout Strategies
In trading, the breakout is when the market essentially breaks away or starts to move away from a certain trending range. If the price exceeds the higher or the lower range of a trend, then a breakout occurs. With breakout strategies, you’ll have to buy higher and also sell higher in the bull market. On the other hand, the bear market implies that you have to sell low and buy back even lower.
Forex Volatility Strategies
Lastly, volatile markets can be very helpful for traders. You can notice such a market via a sharp jump in the prices. Making use of a volatility breakout can be profitable, but you have to keep in mind that such systems deal with quick and short-term trades and that they do not take advantage of any big moves. On top of that, even though the winning percentage is higher, the profit earned per trade is rather low.
The Bottom Line
Naturally, these were not all of the Forex trading strategies that you can rely on to enhance your trading portfolio. However, they are strategies that you should know about if you want to get better at Forex trading.
With some research and training, you can not only take advantage of such strategies but also know when to use the appropriate strategy for a certain condition of the market!
Video – What is a Trader?
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