Simple Forex Trading Strategies That You Can Use
The Forex market is consist of hundreds of different trading strategies, which makes it more daunting and confusing to choose which to use, especially for novice traders. Some strategies are very complicated, with a steep learning curve. So beginners may find it better to start with a simple Forex strategy. Simple strategies offer an effective but low-maintenance approach to beginner traders.
It is often said that a first-time trader is closer to becoming consistently profitable than a trader who has been trading unsuccessfully for a long period of time. This is because a novice trader has not had the time to develop any negative habits. The trader who has been brawling for success need to not only look for what most suits them but also to break any bad habits and remove negative feeling they may have built up over the years.
This article will introduce some simple Forex trading strategies that can help you generate long-term profits.
1. Long-term Breakout Trading
One of the simple Forex trading strategies that really work is buying breakouts on the chart to new highs and selling new lows. Most traders are not able to execute it because they think they have missed a little on the move and want to wait for the price to lower, but in robust moves, this never happens and they are left looking at the move produces thousands of dollars and they are not included.
Focusing on long-term valid breakouts and timing your entries with a couple of momentum indicators could help you produce a lot of money. To fully maximize this simple Forex strategy, you must use levels that are considered important by the market. They happen several times a year per currency but lead to huge moves and huge profits.See also Trading News: How Market News Can Actually Help You
2. The Four-Week Rule
Created by Richard Davoud Donchain, an Armenian-American commodities and futures trader, this strategy is considered one of the simplest and most effective Forex trading techniques. This system is completely mechanical and has only one rule: Buy a new four-week calendar high and sell a new four-week calendar low and maintain a position in the market at all times.
That’s all it is. It is very simple but works well. In fact, lots of traders have back tested it and see. If you want, you can add filters to smooth the equity curve.
3. Trading Overbought Oversold
The first two discussed strategies are long-term, this last strategy, however, is a short-term technique for profit – Forex swing trading. Swing trading simply intends to take advantage of overbought/oversold events within the major trend and you can do this with simple trend lines.
The moment you are able to determine areas of support and resistance, check volatility with the Bolinger band and then utilize the timing tool, which is the Stochastic to confirm the move. Then you can take your profit early and then look for the next one.
This only shows how fun Swing trading can be. In fact, it only needs a little discipline as you do not need to hold moves for a long period of time, and can be learned in a short time.See also Checking on Your Trading Goals
A lot of traders often commit the mistake of thinking that the harder they work and the more complex they make their trading strategy, the more likely it is to work. However, there is no relationship between working hard and being complicated and the success in Forex trading, because you are just judged on your market timing and your trading signals’ success.
Always remember that the simpler the strategy, the easier it is to understand the underlying concepts.
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