14 Popular Forex Trading Strategies
There are a number of Forex trading strategies developed over the years.
Few are based on fundamental analysis while other rely on the chart, patterns and numbers using technical analysis.
Following just a single system all time can’t make you a successful trader.
A trader needs to know how to face various market conditions.This is not an easy task and requires a good understanding of various strategies.
Selection of strategies that can work for you also depends on your personal trading style. Please refer our guide on “7 Steps to Getting Started In Forex Trading”
To help you understand and learn more, we have created a list of various popular trading strategies, ranging from basic to complex.
They are represented for educational purpose and they can be applied by each trader in a different way.
Table of Contents
- 1. Easy Forex Beginner Strategy
- 2. A Simple Forex Day Trading Strategy for Beginners
- 3. How to Trade with the Trend
- 4. Fibonacci Retracement Day Trading Strategy
- 5. Effective and Simple Day Trading Strategy for Forex and Futures Markets
- 6. Trading the Head and Shoulders Patterns
- 7. Double Top and Double Bottom Trading Strategy
- 8. What is a Carry Trade & Forex Carry Trading Strategy
- 9. How to Use the RSI for Intraday Trading
- 10. Using Bollinger Bands to Improve the RSI 5 Minute System
- 11. Be with the trend using Momentum Trading Strategy
- 12. Trade Breakouts – How to Get in Before the Masses
- 13. What is Scalping in Forex? – Learn A Simple Forex Scalping Strategy
- 14. Best Forex Scalping Strategy – Using 3 Popular Technical Indicators
1. Easy Forex Beginner Strategy
Following video presents a very easy strategy for beginners in Forex. He recommends that new traders stick to higher timeframe charts like the daily EUR/USD chart he used in his example.
2. A Simple Forex Day Trading Strategy for Beginners
Day trading is one kind of trading style in which a day trader usually opens and closes all positions on the same day. In this type of trading, traders do not hold any overnight position.
It is a short term trading technique but a bit longer term than scalping. Most of the day traders use 15 minutes, 30 minute or hourly charts for trading.
3. How to Trade with the Trend
One of the hardest questions new traders ask themselves is what is the trend? An uptrend is simply a series of higher highs and higher lows as indicated on the chart below. A downtrend is a series of lower lows and lower highs.
Determining the trend depends on the timeframe you’ll be using to trade the market. The hourly chart may show an uptrend in a particular currency pair while the 4 hours may show a downtrend at the same time.
4. Fibonacci Retracement Day Trading Strategy
Fibonacci retracement is very useful in forex trading as it can determine potential support and resistance levels. These supports and resistances are particularly useful to detect reversals and entry opportunities. Fibonacci retracements tool is very useful for both day trading and long term trading with daily charts.
One should use Fibonacci retracements to find trading opportunities near retracement levels and then take entry decisions using technical indicators. We will discuss a day trading strategy using Fibonacci retracement tool. William % R is used in this strategy.
5. Effective and Simple Day Trading Strategy for Forex and Futures Markets
Here in this section, we will discuss a simple day trading strategy. This is a simple and effective trading strategy to start the day trading.
Indicators used: Bollinger bands (period = 20 and deviations = 2) and MACD (12, 26, 9) indicators used in this strategy.
Currency pairs: This strategy can be used in any currency pair. It is better to trading in the major currencies only.
6. Trading the Head and Shoulders Patterns
We have already learned about the formation of Reversal Patterns – Head and Shoulders Top and Bottom.
Now we will discuss on how we can trade these chart patterns.
These head and shoulders patterns can be traded in two ways; breakout and pullback. We already know that there is a neckline in every head and shoulders pattern. When price breaks this neckline, then it is a breakout and an entry signal.
7. Double Top and Double Bottom Trading Strategy
We have already discussed Reversal Patterns – Double Top and Double Bottom and learned to identify them and their effect. The double top and double bottom chart patterns are very useful in case of trading in financial markets. These patterns are found frequently, and these are very profitable chart patterns to trade.
One thing we should remember that, it is not necessary to form exactly similar high or similar low in case of a double top and double bottom pattern respectively. Sometimes double top patterns found with a lower high point and double bottom pattern with a higher low point.
8. What is a Carry Trade & Forex Carry Trading Strategy
Some Forex traders trade currencies for the interest gap between two currencies. This is called carry trade. In carry trading, Forex traders aim to pull out the interest gap as profit when the price of the pair lies flat.
It includes selling a currency with low interest rate, then using it to buy a currency with higher interest rate.
9. How to Use the RSI for Intraday Trading
How to apply the RSI indicator with Moving Average for Metatrader 4
This strategy uses the 5-minute chart of Tata Motors. We’ll use the 5-minute EUR/USD chart, so open a new blank 5-minute chart of this currency pair.
10. Using Bollinger Bands to Improve the RSI 5 Minute System
This is an addition to an earlier article I wrote on a similar topic called “How to Use the RSI for Intraday Trading” .
The author of that strategy shares some more info about his intraday system. This time, he adds the Bollinger Bands indicator to the mix. This video is fairly short and like the last one lacks in detail regarding the entry signal.
11. Be with the trend using Momentum Trading Strategy
We should know about momentum strategy first. A momentum strategy is a strategy by which a trader trades in the direction of the major trend of the market or currency pair. Momentum strategy often called Trend Following Strategy.
In the case of momentum traders, they tend to take long positions when the market is in the uptrend, and they tend to take short positions when the market is in the downtrend. Momentum traders may hold a position for short term or mid term or long term, depending upon the condition of a trend.
12. Trade Breakouts – How to Get in Before the Masses
The video linked below deals with trading breakouts and how to get in a breakout trade early. Trading breakouts can be one of the most frustrating experiences for traders and especially for newer traders. Price will often break a previous high by just a few pips only to fall back into the range. How do you avoid this?
13. What is Scalping in Forex? – Learn A Simple Forex Scalping Strategy
Forex scalping trading is a very short term trading method. In this method, a trader usually holds a position only for few minutes. This method is quite different from day trading.
In the case of day trading, traders usually hold the position for hours and close the position on the same day. In the case of scalping method, traders not only close position on the same day but also close the position in few minutes. Those who use this scalping method are known as scalpers. Scalpers take entry several times in a day to make quick small profits.
14. Best Forex Scalping Strategy – Using 3 Popular Technical Indicators
We’ll be going over the Forex scalping strategy presented in the video below.
What are some of the advantages of using a scalping strategy to trade the Forex market?
- Quick profits Entry and exit is usually done within a couple of minutes. This allows for quick profits but can lead to quick losses as well.
- Exit is usually within 20 minutes or less
- Lots of trades