Forex trading strategies for beginners – As you begin to take action to choose a trading strategy, it is important to understand the best ways to choose a strategy. There are three main parts to keep in mind when trading forex.
Forex trading strategies for beginners
In the following lines, we explain in detail the best forex trading strategies:
Time frame
It is really important to choose the time frame according to your own style. For example, the difference is huge between the 15-minute frame and the weekly frame! If you are more of a scalper or a trader who takes advantage of small price movements in the market, you should look at time frames between 1 and 15 minutes.
Forex trading strategies for beginners Day traders or swing traders will likely use a larger time frame, such as the 4 hour time frame. Therefore, to make this decision you should ask yourself: “How long do I want to keep my positions open?”.
Repeat trading opportunities
The next question you need to ask yourself is, “How often do I want to open and close trades?” If you intend to open a larger number of trades, it is probably more suitable for scalping as you will open a large number of small trades.
However, there are some traders who spend a lot of time analyzing economic data and macroeconomic reports. This will enrich their fundamental analysis approach, but they will spend less time analyzing charts. If you are going to take this approach, the trading strategy based on larger time frames and more trades forex may be the most suitable for you.
Read more: How to earn money for beginners 2023
Read more: How to make a profit of 50 dollars a day
Transaction size
The last and most important question you will ask yourself is, “How big of a deal do I want?”
At this point in determining Forex trading strategies for beginners you should understand the risks you wish to take while trading. Larger trades involve greater risk and possibly higher losses.
To ensure that you are able to manage risk effectively, you must determine how much risk you want to take on each trade. Some traders tend to set a risk of 1% of the balance on each trade, which means that they are only willing to risk up to 1% of their account in a single trade.
For example, you have $10,000 in your account. If you set yourself a risk size of 1% of the account, then you will only open $100 positions at a time.
According to the general rule, if you are going to open fewer trades, the trade size should be larger and vice versa.
Now you know how to decide which Forex trading strategies for beginners to use. Let’s take a look at some of the common strategies used.
Daily trading
As the name suggests, the forex “day trading” strategy is executed strictly on the same day. This means that all open trades will be closed before the market closes at the end of that day. The timeframes used by day traders will range from the very small (minutes) to the slightly larger (hours).
In general, people who day trade tend to focus on events related to the news. For example, they will monitor economic releases such as interest rates, GDP releases, upcoming elections, and other events that are likely to have a significant impact on the market.
As a general rule, those who choose day trading will look to open trades when the price breaks the 8 EMA in the same direction. Their exit from the trade is usually determined by adopting a 1:1 risk/reward ratio.