Trading is an art and earning from it is an exceptional art. But it isn’t easy to be cracked. Forex trading involves buying and selling of one currency in the form of another currency. Maintaining discipline is a key aspect of trading. While making a strategy involves in-depth analysis before buying or selling any currency. You must strategize well before you start investing in this venture. Usually, when people say that they have decided upon a strategy, they mean that they have adopted one specific method. But in order to develop a strategy, it must involve different experiments and methods. Forex trading is unpredictable and each person has their own forex trading strategy.

The most commonly used Forex trading strategies have been discussed below:

  1. Price Action Strategy

This strategy is the most basic strategy used by beginners, especially at the entry level. It is simply based on prices and no other indicators. Prices of the currencies involved are duly noted and then the forex trader explores the causes of fluctuations in the values of forex pair. It is a quick and efficient strategy that works in all market conditions.

2. Strategy Based On Forex Charts

This strategy is used by traders who are involved in short-term investments. They concentrate on forex charts noticing the changes in the values of currency. Based on this analysis, they take their decisions. Usually, the changes are in terms of pip which is the point in percentage. It denotes that the changes in the values of currency in a forex pair are very minimal. It is a favourable forex trading strategy as the trader doesn’t have to worry about daily news and random price fluctuations. It is simply based on trends.

3. One Hour Trading Strategy

This strategy involves such forex pairs which are highly influenced by each other, especially the major pairs. These are EUR/USD, USD/JPY, GBP/USD and USD/CHF. The traders are involved in forex trading for a span of 60 minutes. They buy and sell within this timespan. This strategy allows traders to focus on other important tasks and not be involved in forex trading all the time. Moreover, it is a very effective strategy, especially for beginners.  

4. 50- Pips A Day Forex Strategy

This strategy is mainly used between EUR/USD and GBP/USD. These currencies are on a very high level in terms of liquidity. This is a very simple way to trade. The profit target is 50 pips while loss pointer is set between 5 – 10 pips. The losses if incurred using this strategy is easily recoverable. The risk factor is much lesser in this case.

5. Transition Trading

The next strategy is based on timeframes. The forex trader enters the market on the lower timeframe. Then he follows which way the market is moving. If it is in favour, profit targets are increased. If not, then they are stopped on a higher time frame. This is a rather latest concept. It doesn’t require a large amount of investment. Also, the risk factor is also subdued since you enter the market on the lower time frame.

6. Buying Strategies Online

Many different companies and online platforms help you make strategies on your behalf. But a trader must be smart enough to use those only after analysing the data and market trends.

7. Position trading Strategy

As per this strategy, a major currency is bought and is held for a longer duration of time. It could last for weeks or months. Such forex trading can only proceeds after extensive research of market trends.  If done correctly, it can provide a rather large amount of profit to the forex trader. The trader buys a lot of major currency when a new trend begins in the respective economy and sells it when the trend out-reaches to majority and moves towards its peak, much before the trend becomes out-dated.

8. Strategizing Entry And Exit Points

Traders must develop and set rules which fix their timing of entering and exiting the market.  It could be for both long and short time period and could differ for different currency pairs as well.

9. Forex Weekly Trading Strategy

Many forex traders prefer intraday trading because of market’s volatility. However, forex weekly trading strategies can provide more flexibility and stability. A weekly candlestick provides extensive market information. It contains five daily candlesticks which reflect the changes in the actual market trends. Weekly forex trading strategies are best to avoid excessive amount of risks.

10. Forex Swing Trading Strategy

This strategy is another short term forex trading strategy wherein the only aim is to take advantage of overbought/oversold scenarios within the major forex pairs. It can be done only by following simple trend lines. All prices get pushed too far up or down, due to greed and fear and smart traders take benefit from these extended levels.

A forex trading strategy can be either purchased off-the-shelf or developed internally. It definitely requires research, time and effort. But all this would help the trader in earning hefty amounts of profit. Traders could develop their own trading systems and experiment using them. Also, a trader must perform the experiment on some virtual account before entering the real market.