Forex Trading Strategies That Work | 20+ Types of Trading Strategies PDF | IFCM UK
IFC Markets Online CFD Broker

Forex Trading Strategies

What is Forex Trading Strategy

In a highly volatile market where prices move rapidly, traders are in dire need of something tangible to rely on, here comes forex trading strategies. Forex trading strategy is a technique used by forex traders to help decide whether to buy or sell a currency pair at any given time. In trading, you may need our other article about "What is Forex Trading and How does it Work".

Forex trading strategies can be based on either technical analysis, fundamental analysis, or both. Strategies usually build on Forex trading signals, which are in their essence triggers for actions. There are well known forex trading strategies that can be easily found or traders themselves can construct their own. You may also be interested in one of the most popular trading instrument - cryptocurrency trading. To improve your knowledge of crypto trading you can learn cryptocurrency trading strategies.

Types of Trading Strategies

Swing trading

This strategy is a long term trading strategy, when trades are kept open from a few days to, sometimes, several weeks. Swing trading strategy’s essence is taking advantage of market big fluctuations "swings".

Fundamental analysis plays an important role on longer timeframes. Strong directional moves are often triggered by important or unexpected market news, such as corporate income statements or central bank meetings, which means swing traders need to be aware of market fundamentals.

There are ways to develop a reliable trading plan. Here are the most common swing trading techniques we’d like to share with you.

Swing Trading Tactics previews

  • Moving average crossovers - When the shorter-term MA crosses above the longer-term MA, it's a buy signal, as it indicates that the trend is shifting up. This is known as a "golden cross."
  • Cup-and-handle patterns - A cup and handle is a technical chart pattern that resembles a cup and handle where the cup is in the shape of a "u" and the handle has a slight downward drift. A cup and handle is considered a bullish signal extending an uptrend, and is used to spot opportunities to go long.
  • Head and shoulders patterns - A head and shoulders pattern is a technical indicator with a chart pattern described by three peaks, the outside two are close in height and the middle is highest. A head and shoulders pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal.
  • Flags - Flags are areas of tight consolidation in price action showing a counter-trend move that follows directly after a sharp directional movement in price. The pattern typically consists of between five and twenty price bars. Flag patterns can be either upward trending (bullish flag) or downward trending (bearish flag).
  • Triangles - A triangle is a chart pattern, depicted by drawing trendlines along a converging price range, that connotes a pause in the prevailing trend. Technical analysts categorize triangles as continuation patterns.

Key reversal candlesticks

Key reversal candlesticks, as well, can be used to complement basic tactics for more accurate execution. A key reversal is a one-day trading pattern that may signal the reversal of a trend. Other frequently-used names for key reversal include "one-day reversal" and "reversal day."

Forex Trading Strategies That Work

There are many circulating Forex trading strategies in trading and sometimes it can be confusing which one to choose. Which one works? Below we will share with you the most successful ones.

These are trading strategies that work well during Forex trading executions.

  • Scalping trading strategy is very popular in Forex trading Scalpers focus on making profit on small moves that occur frequently and favour markets that aren't prone to sudden price movements. Strategy involves opening a large number of trades in a bid to bring small profits per each. The disadvantage of scalping is that traders can't afford to stay in a trade for too long, plus scalping takes a lot of time and attention to find new trading opportunities.

    For example a trader scalping to profit off price movements for Adidas AG Stock trading for $318. The trader will buy and sell a huge amount of Adidas AG shares, let's say 100,000, and sell them during price movements of small amounts. Price increments can be as low as $0.05 or less, making small profits from each share, but since purchase and sale are in bulk, profits could be quite solid.

  • Day Trading strategy refers to trading during trading day. Quite simple - all trades must open and close during the trading day. Day trading strategy is applicable in all markets, though it's used more in currency trading. When executing day trading strategy, trader monitors and manages open trades the market throughout the whole day.

    Note, leaving positions open overnight fraught with loss of money.

    This type of strategy is often news based, specifically scheduled events - economic news, statistics, elections, interest rates. Basically, one of the ways to execute this strategy is to pay close attention to news that can affect currencies, and act accordingly. That’s why more often than not day traders trade more actively in the mornings, since most news is released at that time.

    There are a few unwritten rules day traders should follow to insure themselves from risks:

    • Day traders follow a one-percent rule - never put more than 1% of capital or trading account into a single trade. If a trader has $10,000 in a trading account, position in any given instrument shouldn't be more than $100.
    • Setting stop loss and take profit points - is the price at which a trader will sell a stock and take a loss on the trade (this happens when trade doesn’t go the way it was planned, in a way it’s a cutting losses approach).
    • Setting Take-profit point is the price at which a trader will sell a stock and take a profit on the trade.
  • Position Trading is a long term strategy, some call it “buy and hold” strategy. During Position Trading strategy traders usually use long term charts, from daily to monthly, and with a combination of other methods establish the trend of the current market. This kind of trade lasts from a few days to several weeks or more. The main idea of position trading strategy is to determine the direction of the market and make use of.

    Minor market fluctuations aren't considered important since they don't create trends, hence no impact on position trading strategy, unlike Scalping where the whole strategy is based on it. Since position trading strategy leans on fundamental analysis it's reasonable to monitor central bank monetary policies, political developments as well as long term technical indicators and macroeconomic environment.

Trading Strategies Based on Forex Analysis

Perhaps the major part of Forex trading strategies is based on the main types of Forex market analysis used to understand the market movement. These main analysis methods include technical analysis, fundamental analysis and market sentiment.

Trading Styles Strategies

Forex trading strategies can be developed by following popular trading styles which are day trading, carry trade, buy and hold strategy, hedging, portfolio trading, spread trading, swing trading, order trading and algorithmic trading.

Trading Order Types Strategy - Forex Order Types

Before any trader starts to buy or sell stocks it's important to implement a trading order strategy. And before that traders have to have an understanding of what type of order in which cases to use.

Algorithmic Trading Strategies

Method of order execution using pre-programmed automatic trading instructions, taking into account variables such as time, price and volume, is known as algorithmic trading.

Close support
Call to Skype Call to WhatsApp Call to telegram Call Back Call to messenger