9 Smart Forex Trading Strategies You Need to Know About

Did you know that you don’t have to be exceptionally smart or a math whiz to trade successfully? Even armchair investors can beat the pros from time to time.

Forex is one of the easiest segments to enter for amateurs.

Over the last decade, the Forex market has emerged as one of the largest institutions in the financial sector. You too can make good amounts of money by learning the different trading strategies and choosing one that boosts your chances of winning right away.

For all its charts, ratios and numbers, trading is more of a strategy than science. So, don’t be overwhelmed by the expensive trading systems and the complicated indicators that seem like only a super-human could make sense of.

Below are some smart Forex trading strategies you can use to become a successful trader.

1. Fundamental Analysis Strategy

Fundamental analysis helps you gather a view of things to come. From a very practical standpoint, analysis attempts to predict the future based on global economic news, political events or social forces that may affect financial markets.

During the analysis, you should compare the performance of one currency relative to other currencies and their countries. This offers some insight on how well a country’s economy is doing.

Don’t worry. It’s not an extremely difficult process as it sounds, but it does involve a lot of work. I suggest you stay in the loop with upcoming economic releases made by a State’s Central Bank periodically or by watching the news.

2. Technical Analysis

This is one of the most accessible Forex trading strategies. It’s great for starters because it’s not very complicated.

The idea is that a person can look at past and recent behavior of a certain currency to determine the likely price movement and trading conditions.

To use this technique effectively, you need to develop a healthy obsession toward identifying recurring movements in price.

3. Day Trading Strategy

In this strategy, knowledge is power. You need do your homework on the latest events that affect stocks and stock market news.

As the name suggests, you buy and sell stocks, commodities or currencies within the same trading day and exit any active trades before the day ends. This scenario helps you evade the harm caused by large movement of currency that happens at night.

A highly popular day trading strategy is known as the London day break strategy.

4. Swing Trading Strategy

This strategy can take up to a week to implement. It’s the happy medium between day trading and long-term investing.

To use this method, you need to hold a position in the market for a couple of days in anticipation that you will make a profit from short-term price patterns.

Swing traders attempt to identify a stock will make a move before it makes it or just as it’s starting to. This Forex trading plan is more of having quick trigger fingers and making automatic trades without second-guessing yourself.

5. Positional Trading Strategy

This is a long-term trading strategy that can take place in a matter of weeks, months or even years. The strategy is for traders who have a real feel for the market and a lot of capital investment.

Positional traders seek to make maximum profit by taking a position in an asset and analyzing major shifts in prices to profit from the move. This strategy offers lower leverages.

This strategy does not require much time. Once your research is complete and you have decided to enter a trade, there’s little left to do. Your primary concern as a positional trader is to be present in the market when the price does eventually make its move.

When using the strategy, you have to depend on other Forex trading strategies, such as technical analysis and fundamental analysis.

6. Momentum Trading Strategy

This strategy works on the assumption that price movement in a certain direction will cause a trend that will continue for a given duration of time.

When using this strategy, you apply momentum indicators to measure conditions to make informed trading solutions.

The strategy takes into account both volume and price, and an early entry will offer the greatest reward with the least risk.

Weakening price movements indicate losses while strengthening movements signify profits. As a momentum trader, you should avoid aging trends at all costs.

7. Range Trading Strategy

This is one of the simplest Forex trading strategies and very popular for beginners.

The strategy works on the assumption that for a given period of time, prices can stay within a predictable range. This theory can be proven by markets that have similar economic characteristics.

In this market, you should try to predict price reversal. Then buy or sell at predictable “Lows” and “Highs,” minimizing the risk of losses.

8. Trend Trading Strategy

This method is amongst the best Forex trading strategies. Forex market can either be trending or consolidating.

Trend trading improves your win rate and offers a better risk to reward.

The market can exhibit uptrend or downtrend. Using this strategy requires you to understand the movement of trend lines and buy at “Lows” and sell at ”Highs”.

Using the trend-trading strategy enables you to make a correct analysis by simply observing the trend. Use the available indicators to make a prediction.

The trick behind trend trading strategy is choosing a good entry point. Some of the indicators you can use in this strategy include Moving Average, the Relative Strength Index (RSI), and moving average convergence/divergence (MACD).

9. Forex Signals

Forex Signals are a great resource to incorporate into your trading strategy. Simply said Forex Signals are trading tips put together by professional traders which include entry & exit price levels, generally these signals are also backed by market commentary so the end-user can understand why the trade was executed.

Forex signals providers can be judged by their historic performance on real live trading accounts, so if you don’t want to be scammed be sure to ask the signal provider for verified trading results before hand. However if the signal provider is free, don’t expect too much.

Read our full guide on forex signals here.

Why Use Forex Trading Strategies

The Forex market involves risk. But it’s not gambling.

By developing Forex trading strategies that help you analyze trends on the charts, you’ll be able to trade more effectively.

Polish your market analysis and chart reading skills. Trust your analysis. With lots of hard work and practice, you can master several strategies that will help lead to better trade results.

This article was put together by our in-house financial experts.