EToro is really simple to use, too – making it perfect for newbies. In terms of safety, eToro is regulated by the FCA, ASIC, and CySEC. The overarching reason for this is that you are not pressured into closing a position before the end of the day. On the contrary, forex swing trading offers much more flexibility – so you can keep positions open for hours, days, or even weeks. 67% of retail investor accounts lose money when trading CFDs with this provider. Go over the options we have provided in this article, choose the one you feel most comfortable with and test it on a demo account (after a backtest).

• You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money.
• Whichever methodology you choose, be consistent and be sure your methodology is adaptive.
• However, they are hoping that a large number of trades is successful as profits are constant, stable and easy to achieve.
• In addition, each trader should get the basics of money management.
• This includes the likes of eToro and AvaTrade, which we discuss in more detail shortly.

Even if you have enough cash to cover the change in value, some brokers will liquidate your position on a margin call at the low. Unlike equity brokers, forex brokers are usually tied to large banks or lending institutions because of the large amounts of capital required (leverage that they need to provide). It is important to research the forex market before you open a position as the market works in a different way to the majority of financial markets. An FX trader would enter into a long position when the fast EMA crosses the slow EMA from below, and enter into a short position when the fast EMA crosses the slow EMA from above. A trader would wait for the price action to reach the EMA, at which point the theory suggests it will rebound.

Learn the Best Forex Trading Strategies from 20+ Years Forex Experts

For example, if you cannot stomach going to sleep with an open position in the market, then you might consider day trading. On the other hand, if you have funds you think will benefit from the appreciation of a trade over a period of some months, you may be more of a position trader. Just be sure your personality fits the style of trading you undertake. In Figure 3, above, we can see many indicators that point to a long position. We have a bullish engulfing, Fibonacci support and a 100-day SMA support. Again, we see a Fibonacci resistance level that provides an excellent exit point.

If you have fire in your heart and want to make money for forex, that’s the most important thing. However, it’s also crucial to have a good strategy because not having one is like throwing your money into a well and waiting for those profits to start rolling in (they won’t). Scalpers also closely monitor price charts for patterns that can help them predict future exchange rate movements. They tend to use very short-term tick charts similar to that shown below for EUR/USD for analysis. Scalpers generally do best using a broker with tight spreads, quick guaranteed order executions and minimal or 0 order slippage. The truth is that the forex market can be unpredictable and losing is a normal part of the game.

• This strategy is an excellent fit in markets where there isn’t significant volatility.
• If you feel confident in your strategy and the broker you chose, then you can open up and fund a live account to start trading with real money.
• Conversely, you can trail your stop loss in cases when market movements do not favor you.
• You should read and understand these documents before applying for any AxiTrader products or services and obtain independent professional advice as necessary.
• Don’t be afraid to ask for help in order to discover the best strategy for your newly-established forex trading style.
• News trading can be very risky as the market tends to be extremely volatile during those times.

Ideally, forex trading shouldn’t exceed more than 15% of your entire investment portfolio. Some commonly used momentum indicators include the Moving Average Convergence Divergence (MACD) histogram and the relative strength index (RSI). The daily candlestick chart shown below for the GBP/USD exchange rate also displays the MACD and RSI in indicator boxes. The 30-minute candlestick chart of GBP/USD shows a breakout below the level of the lower of the 2 converging trend lines of a triangle pattern drawn in red. Note that trading volume also increased when the breakout occurred, thereby confirming it.

Swing Trading Against the Trend

Day trading could suit you well if you like to close your positions before the trading day ends but do not want to have the high level of pressure that comes with scalping. The platform allows you to trade via its website or through third-party providers MT4 and MT5. There is also a mobile app – should you wish to trade forex on the move. Libertex is regulated by CySEC and had a 20+ year track record in the online forex trading scene. The final pair category – which is best avoided as a beginner, is exotics. These pairs will contain a currency from a non-major economic region  – such as South Africa, Peru, Kenya, and Turkey.

How to choose a forex trading strategy?

Scalpers need to be good with numbers and be able to make decisions quickly, even when under pressure. They also usually spend more time in front of the screen and tend to focus on one or a few specific markets (e.g. only scalping EUR/USD or only S&P 500 futures). The benefits of price action trading are that your charts remain clean, and there is less risk of suffering from information overload.

Different Types of Forex Trading Strategies

Later in the article, we will outline the different factors that influence individual trading styles and forex trading strategies. Forex styles provide in-depth analysis of market conditions and help traders to determine when to buy or sell a currency pair at a given time. Once you know your way around a pricing chart, you’ll be able to deploy some of the best forex day trading strategies utilized in the currency scene. Many scalpers use indicators such as the moving average to verify the trend. Using these key levels of the trend on longer time frames allows the trader to see the bigger picture. Scalping within this band can then be attempted on smaller time frames using oscillators such as the RSI.

For example, the robot provider might claim that the underlying software is able to outperform the market consistently. But, in reality, it could end up blowing through your account balance on the first day. In its most basic form, this will ensure that you never risk more than a certain amount on each trade.

How to compare forex strategies?

Range trading can result in fruitful risk-reward ratios however, this comes along with lengthy time investment per trade. Use the pros and cons below to align your goals as a trader and how much resources you have. Although change can be good, changing a forex trading strategy too often can be costly. There are trading algorithms out there best strategy for trading forex but we’re still far off from having a truly effective forex trading robot that can just take the wheel for us. If you’re looking for a trading algorithm, be careful and research it as you would the market before making a big trade. Also, make sure your broker has negative balance protection, especially if you’re a beginner—here’s why.

The carry trade strategy is one of the best and most effective trading strategies that can be used not only by beginners but by professional traders. Assuming you work nine to five in the U.S., you could trade before or after work. The best trading strategy in those time blocks is to pick the most active currency pairs (those with the most price action). Knowing what times the major currency markets are open will aid in choosing major pairs. Determining the direction of your trades is an important step in mastering the Forex strategy.

Forex Trading Strategy 3: Create a Bankroll Management Plan

Every novice trader that is looking to chart a course for success in forex needs to answer this question. There are several options to choose from, and it is crucial to make informed decisions. In this part of the article, we will look at how you can choose the best style for you – based on your experience, ability, and confidence. A Retracement refers to a TEMPORARY reversal in price within a major price trend.

Carry trades include borrowing one currency at lower rate, followed by investing in another currency at a higher yielding rate. Trade times range from very short-term (matter of minutes) or short-term (hours), as long as the trade is opened and closed within the trading day. In this selected example, the downward fall of the Germany 30 played out as planned technically as well as fundamentally.

See what that trading community has to say about the best trading strategy blogs on the internet. We get this question often because we are the website that everyone goes to for trading strategies. However, I think you know as well as I do that this is a complicated question. To find the solution entirely, we are going to have to give you a complete, in-depth answer.