Strategies for Part-Time Forex Traders

forex trading strategies

This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. You can practice implementing this formula with different currency pairs and trading strategies risk-free when you create a demo account. Swing trading is a trend-following strategy that aims to capitalize on short-term surges in price momentum. Position trading is a strategy in which traders hold their position over an extended time period—anywhere from a couple of weeks to a couple of years.

Now if both lines fall below the 20-mark, the asset is oversold, and more traders will choose to buy, driving the prices up. This is a momentum indicator obtained by comparing an asset’s close price and its price range over a given period. It produces better results with higher time frames such as the daily chart. With swing trading, the emphasis is on looking for strong price swings over a period of one day or up to several days. It would be necessary for the swing trader to leave positions open overnight, but you must watch out for unexpected occurrences such as major news updates.

On top of that, in most cases, any strategy found online commonly used falls prey to market manipulations. Shiny object syndrome and strategy hopping is real obstacles to your trading success. Realistic opportunity of steady and profitable trading at Forex with the use of the application. Fractals are patterns recognised by traders as confirming a reversal. In a bullish turn, a fractal looks like a dip in the middle, sided by higher points. This is a step up from the Daily Fibonacci Pivot Trade and requires the trade to map Fibonacci sequences over the same trend but at different points. The NAGA Group AG is the holding company of various companies, such as NAGA GLOBAL LLC, NAGA MARKETS EUROPE LTD, NAGA Technology GmbH, NAGA Pay GmbH and has a close link with NAGAX Europe OÜ.

What is the best strategy to trade forex?

  1. Scalping. Scalping is a very short-term trading strategy that involves taking multiple small profits on trading positions with a very short duration.
  2. Day Trading.
  3. 3. News Trading.
  4. Swing or Momentum Trading.
  5. Trend Trading.

The complicated portion of it is learning to understand the economic reports and compare them to other countries. Day trading carries less risk than other strategies, thanks to the ability to set a narrow Stop Loss. Potentially yes, as long as you conduct adequate analysis and have your entry and exit set. Get Confirmation Before Entering – Not waiting for confirmation and entering into a trade too early can result in heavy losses. First get confirmation from your analysis, then place your entry into the trade. The Pop ‘n’ Stop Trade allows you to take advantage of a sudden price breakout from a tight range.

Winning Forex Trading Step #5 – Place Stop-loss Orders at Reasonable Price Levels

You then draw the second Fibonacci from the low of the second wave to the highest high. The next step is to identify confluences or overlaps between the lines of the two separate forex trading Fibonaccis. During an uptrend, the level of confluence indicates a strong line of support. In a downtrend, the confluence confirms the presence of a strong line of resistance.

forex trading strategies

Whether it’s the soccer pitch, a surgical operating table or forex trading, implementing a tried and tested strategy is the best path to achieving success. It is also practical to objectively analyse the reliability of your trading strategy and make any necessary changes to improve its efficiency before using real money on a live trading account with it. This will help you be more confident that you’re using a system that makes money, as well forex trading strategies as uncover what market conditions are most profitable. Sometimes the best way to make money for one type of trader can be a poor fit and a losing strategy for another type. The monetary policies of central banks are key to a carry trade strategy, mainly with regard to the future directions of interest rates. Know When to Exit – Trading with emotion is one of the worst things a trader can do, whether they are a beginner or more experienced.

Breakout strategy

In addition, these applications let traders backtest trading strategies to see how they would have performed in the past. The amount that a foreign exchange trader makes will vary depending on how much trading the trader does, the institution that they work at, if they trade alone, and how successful they are. Fortunately, several basic strategies exist to allow part-time traders to stay active and protect their positions even when they are away from their screens or even asleep. Position trading is reserved for more patient traders with a background in finance and economics as they look to profit from long-term market trends. Scalping is very popular in Forex due to its liquidity and volatility. Investors are looking for markets where the price action is moving constantly to capitalize on fluctuations in small increments. A popular advice in this regard is to set a risk limit at each trade.

In addition to the limit set on each position, day traders tend to set a daily risk limit. Take profit is also 5 pips as we focus on achieving a large number of successful trades with smaller profits. Therefore, in total 20 pips were collected with a scalping trading strategy. Before we proceed to discussing the most popular Forex trading strategies, it’s important that we understand the best methods of choosing a trading strategy.


Just as the market environment constantly evolves, so do traders and their preferences. Carry trades perform well in a bullish market environment when traders are seeking high risk. The Japanese Yen is a traditional safe haven, which is why many carry trades involve being short on the Yen against another “risk-on” currency. When scalping, traders are trying to take advantage of small intraday price moves. Some even have a target of only 5 pips per trade, and the trade duration could vary from from seconds to a few minutes. Scalpers need to be good with numbers and be able to make decisions quickly, even when under pressure.

Cautious but experienced investors can use fundamentals trading, which involves following global news to find countries with strong economic trends. Carry trading—holding a currency that pays a high interest rate against one with a low interest rate—can make big profits or lose value quickly. You can combine position trading with your daily job as you don’t have to monitor your trades on a daily basis. You do not take overnight positions with day trading, so you don’t have to pay swaps. But in order to enjoy that trade, you have to have sufficient investment capital in your account to profit from such a trading opportunity whenever it happens to come along. The indicator was developed by a Japanese newspaper writer, and it’s a combination of several indicators meant to give traders all the information they need in one glance.

This is particularly useful is you suspect the market to experience some short-term volatility. Therefore, hedging forex​ is useful for longer-term traders who predict a forex currency pair will act unfavourably but then reverse shortly after. Hedging as part of your forex strategy can help reduce some short-term losses if you predict correctly. This can be an effective forex trading strategy for catching new trends. When direction in the markets changes then the breakout trading strategy is often one of the early signals. The example shown is for EUR/USD – a longer-term breakout on the daily charts.

The Bladerunner Trade

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forex trading strategies

The default look-back period is 14 days, but you can vary this parameter to increase or decrease the indicator’s sensitivity. While it was developed to track momentum and velocity, it now indicates if forex trading the market is overbought or oversold. However, note that like other indicators it may produce fake signals. When the dots are above the price line, look out for an uptrend as it may be likely to form.

What If You Only Took 4 Trades a Month?

These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy. Minor market fluctuations are not considered in this strategy as they don’t affect the broader market picture. In general, the lower the number of trades you are looking to open the bigger the position size should be, and vice versa.

  • A meeting of the European Central Bank will certaintly impact the Euro the most.
  • Such strategies, based on previous highs and lows on a chart, can make risk management relatively straightforward for any trader.
  • Leverage is a great tool to use to increase your potential profits, but it also increases your potential losses, so use the right amount of leverage for your trading capital and risk tolerance.
  • You’ll be trading with simulated money, but under genuine market conditions.
  • Traders use technical analysis to identify potential retracements and distinguish them from reversals .

Read on to learn more about copy trading and how it could benefit you. Like any other investment arena, the forex market has its own unique characteristics. In order to trade it profitably, a trader must learn these characteristics through time, practice, and study. If you guessed that Trader #1 is the super-successful, professional forex trader, you probably guessed wrong.

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