4 Forex Trading Strategies for Beginners

When first starting to invest in forex trading, it’s difficult to learn the ropes. There are a lot of systems, strategies and techniques online, and it’s easy to get stuck in information overload. A lot of potential traders keep learning, but they never actually put their education into practice.

In the end, the potential trader sits back and never actually makes a trade.

1. Pick a Trading Style That You’re Interested in Trying

You need to sit down and figure out what trading style you like best. There are four key trading styles, but there are obviously styles that traders create on their own. Beginners may want to try and follow one of these trading styles:

  1. Day trading. A trade that exits by the end of the day. This style eliminates overnight risks, and trades are short in duration, often just a few hours. This is a conservative style of trading.
  2. Swing trading. Trading options that hold positions for several days. The goal is to wait for short-term patterns and leverage them for profits.
  3. Positional trading. A long-term trend follower will choose positional trading. This trading style will maximize price shifts.
  4. Scalping. The final trading style is the “scalping style.” Fast and efficient, these trades last for just a few minutes and make heavy use of tick charts. Platforms that leverage Metatrader 4 offer analysis tools that can help by offering multiple chart setups.

Choose the style that you like best.

2. Trend Following Strategy

The trend-following strategy is ideal for a person that likes following patterns. You’ll find times when support breaks and markets start moving lower. Some traders will start selling due to panic, and then there hits a point when buyers believe that the prices will no longer decline.

This strategy involves:

  • Buying when resistance is broken
  • Selling when support levels fall through

Trend following is in-depth, but it’s a strategy that you’ll want to learn more about because it’s such a popular option.

3. Stop-Loss Orders Strategy

If you’re a part-time trader, you don’t have time to sit down every 30 – 60 minutes to read charts. Stop-loss orders are a way of letting your computer or trading platform work for you. What this does is continually monitor your position and the market.

With stop-loss strategies, you’re minimizing risks and protecting your money.

You can tell your “partner” to sell at $1.25, so it will sell at the next available price, which may be $1.20. You’ll be able to limit your losses this way, and it’s a great choice for the part-time investor that wants to trade with minimal risks involved.

4. Price Action Strategy

All it takes is 10 minutes to start trading, and a lot of traders will use their off-time during the work day to make a few trades. The strategy uses technical or charts to make an informed trade. The trader will analyze bars, with up bars being a signal of an uptrend.

Success comes with trading on a timeframe that matches your schedule.

While less technical, the price action strategy has been successful for those traders that can only pop in and out of a platform to make trades randomly.

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Melissa Thompson

Melissa is a mother of 2, lives in Utah, and writes for a multitude of sites. She is currently the EIC of HarcourtHealth.com and writes about health, wellness, and business topics.