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A Newbie’s Guide to Forex Trading Strategies

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A Newbie’s Guide to Forex Trading Strategies

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Never heard of Forex before? Well, welcome to the club – it’s a term that normally stays within the realm of financial trading. So for those of us who aren’t up to speed, we’ve been doing all we can to find out as much as possible.

Surprisingly, grasping what Forex trading is appears to be much simpler than we first assumed, as Forex is a portmanteau of foreign currency and exchange, a process whereby one currency is exchanged for another in the foreign exchange market for trade, tourism, and commerce purposes. This allows different countries to trade with one another despite having different forms of currency, using exchange rates to determine the value of each currency in relation to another. 

From an individual perspective, forex trading refers to the act of trading the price movements currency pairs online via one of the many online brokers in the market. To help you get started in this form of trading, we have put together a series of tips and strategies that even the most clueless internet user could decipher, so read on and get started!

Ways to Trade

Each way of trading and exchanging in the Forex market is highly personal, thus the strategy employed depends entirely on each person and their individual reasons for wanting to trade. For example, you might find that a strategy you learn about might not be appropriate for you and therefore you should try another approach. The key here is experimentation, as you won’t know what will or won’t work for you until you test it out.

There are different trading strategies for you to consider and choose from, depending on if you’re looking for long-term or short-term trading options, and it’s important to remain abreast of the new strategies gaining popularity in order to stay ahead of the game – as any good trader will tell you. The four most popular strategies currently in employment are scalping, day trading, swing trading, and positional trading.

Scalping

Perhaps the most nefarious sounding of all the trading options, the name implies much more violence than is actually included in this strategy!

Scalping refers to trades that are very short-lived, with some only lasting for a matter of minutes. As the name suggests, this strategy requires the trader to rapidly beat the bid and skim just the smallest profit gains. Due to the relative complexity and knowledge required regarding exiting a trade, this popular strategy is considered one of the more advanced techniques, and should therefore only be used by those who feel supremely confident in their ability to get in and out quickly.

Day Trading

As is suggested by the name, these are trades that last for just one day, with the trader exiting prior to the end of the day, which prevents the exchange rates being impacted by fluctuations occurring overnight and therefore secures your profits.

If you are a complete and utter beginner, this strategy is the most user-friendly and is likely to help you succeed from the off.

Swing Trading

This style of trading is one that is impacted over several days by various fluctuations and changes in prices patterns. The overall aim of this strategy is to utilise short-term patterns to make a small profit, meaning that the traders using this strategy tend to check rates on the market at regular intervals across a number of days.

Positional Trading

In contrast to swing trading, this method aims to use long-term trading patterns to profit from major shifts in process. Traders utilising this method ordinarily use the end-of-day charts to determine the overall pattern emerging, and makes moves based on these forecasts. This makes for a much steadier trading base, but requires a good knowledge of overall patterns and trends, and what they signal, in order to be successful.

With his handy guide, you’ve got everything you need to indulge in a little Forex trading – so what are you waiting for? Get started and enjoy!

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