There are many strategies in forex trading. However, it is vital to know which one can benefit you most. Some strategies work for some traders and may fail on others. And vice versa. It is not about choosing the best strategy out there but finding a proper strategy that suits your need and works for you. Here's a list of strategies that traders can consider...
1. Reversal Pattern Trading
A reversal pattern in forex trading occurs when the path of least resistance is broken and there's a probability for price to move in an opposite direction. The aim of this strategy requires the ability to spot these patterns quickly in order to maximize profit. Understanding of candlestick pattern will be a big help.
2. Trend Line Trading
This is one of the best forex trading strategy for beginners as trend line is an easy concept to understand. Also, it can be applied with other strategies easily. In this strategy, traders look for clear support and resistance levels that point out whether price will continue with the current trend or reverse.
3. Fibonacci Retracement Trading
This is a very common technique used in forex trading to determine levels where price may potentially reverse. In this strategy, traders look for areas of support and resistance from key Fibonacci ratios such as 50-, 61.8%, 78%, 88%-100% and so on.
4. Fibonacci Expansion Trading
In this strategy, Fibonacci ratios are used to determine areas of expansion where reversal may happen. The idea is similar to Fibonacci retracement but in a different perspective. For instance, a trader will look for a pullback after hitting the highs or lows of an uptrend or downtrend. These areas are expected to have a Fibonacci expansion and hence, chances of reversal may occur at these levels.
5. Channel Trading
In this strategy, traders look for two parallel lines that form a channel on a chart which acts as a support and resistance point where price might reverse from. Therefore, once a channel is formed, traders will look for candles that close outside of the channel in order to determine a potential entry point.
6. Pivot Point Trading
This forex trading strategy uses the old support and resistance levels from previous sessions on daily charts to determine current support and resistance points. The idea is to use the most important support and resistance level from previous trading sessions to forecast future areas of support and resistance.
7. Elliott Wave Trading
In this forex trading strategy, traders look for 5 waves in a structure that signals that price is most likely going to reverse. In order to make it work, traders have to determine the main trend first in order to spot the three corrective waves against the main trend. This strategy requires an in-depth knowledge of Elliot wave principle and can be applied with other strategies.
The Bottomline:
However different these strategies are, it all boils down to deciding which one fits your strategy and which right trading platform to use. You may start with Meta Trader 5, which is a reliable trading platform used worldwide.
Over to you, what's your forex trading strategy for long-term goals?
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