Forex Trading has grown rapidly because of the internet, making some forex trading strategies that works for professional broker available to millions of people. Mainly investors and brokers rely on either fundamental analysis or technical chart analysis. Forex trading strategies are build based of various high level of complexity. One strategy that work for one of the investor may not work for another investor. It highly depends upon individual nature and capital investment. As a beginner, we often rely on online help and tutorials to work our way out through the Forex Market. After discussing with forex experts and their strategies, we thought to openly share in this e-learning tutorial course. This education lesson will help beginners who are interested in forex trading.
List of Top 10 Forex Trading Strategies that work profitable:
Forex trading is also called as currency trading or FX trading. Here are some of the forex trading strategies for beginners which professionals take into consideration when trading.
1. Carry Trade Strategy:
Among all, one of the very common forex trading strategies is Carry Trade. In this an investor or a buyer, buys currency at lower levels with the intension to sell at the higher rate of returns. This is based on simple concept of any of the financial markets i.e.. Buying at lower level and selling at higher level.
2. Arbitrage: Forex Trading Strategy:
This is an ancient time strategy which is likely a speculation strategy. In this strategy buyers or an investor makes profit from the loop hole of the financial market. Here investor takes an advantage of difference in price in different markets for same instrument. For example: Investor buy USD/INR in Indian Market and sells in American Market due to difference in price traded in different markets.
3. Time Frame Charts Strategy:
As a Trader who rely on technical analysis, you should invest their time on higher time frame charts more rather than the short time frame charts. Higher time frame chart contains accurate and meaningful data that helps you understand forex trading easily.
4. Hedging Trading Strategy:
To hedge, you need to initiate on long and short position using a single pair, by taking both sides the risk reduces. It doesn’t matter which way the pair moves; you will both lose, earn or even out. As a fund manager or large institutional investor, it become necessary as a part of forex trading strategies to limit the risk of losses and increase the profits on a trend.
5. Scalping: Forex Trading Strategy:
A practice that is made by trading in a very short term for just a few pips. A trader should be cautious of the trading time so that you don’t end up making massive losses. Everyone should be extra careful and protective on their investment when trading. Avoid placing a leverage that is too high in order not to lose too much money in the future. You should only risk an amount you can afford to lose. Always trade with keeping stop loss on order to limit your losses incase trend changes.
6. Fair Value of Forex Pairs:
As a fundamental Analysis, fair value is an efficient way of currency trading. Fair value strategy indicates which among the two currencies are strong. You can figure out the fair value based on various economic data like GDP of two countries, unemployment rates, inflation rates, etc. Based on various performance points you can evaluate the shape of the currency trading as of date.
7. Forex Fibonacci Retracement Strategy:
As a trader who rely on trend of the market, they may take the advantage of retracement strategy or breakout. There are 3 important points to be considered for trend traders. Firstly find the trend, resistance and support level of the trend. Secondly Retracements are breakout or pullback which indicate the change of the trend. Thirdly, you can draft your plan of capital investment based on Fibonacci retracement points. Fibonacci numbers and points are very powerful and popular among mathematicians. Most important Fibonacci numbers are 0.236, 0.382, 0.5, 0.618, 0.764. You can use various Fibonacci tools to plan your investment and breakout levels.
8. Forex Trading Candlestick Patterns:
When you are trading based on technical analysis, the decision of buying or selling mostly depends on price action in the past. Candlestick are fully packed with information in the form of chart. It does not indicate the market trend but it assist you to predict future price based on past patterns. Candlestick patterns indicators work profitable during high volatile trend and pretty good in little volatile trend.
9. Divergence Forex Strategy:
As a fundamental analysis, investors and traders also make use of divergence indicator to cross verify the trend of securities. This indicator is also used as a leading indicator by financial analyst. This are very simple patterns which indicates movement of price and predict future change in price. If trend of price is breaking higher highs, then it is the indicator of uptrend. If trend of price is making lower lows, then it is the indicator of downtrend.
10. Horizontal Price Channel Forex Trading Strategy:
For most traders, horizontal levels are important apart for trend of the price. Many experts like: Warren Buffet, Jesse Livermore, George Soros has confirmed that various complex trading strategies are based on horizontal levels. One of the forex trading strategies which is again made-up of simple pattern which can be verified by just looking at it. Horizontal levels are lines drawn based on previous lower level and higher level. If price move above the horizontal price channel, you can spot as uptrend and take the advantage of the trend movement.