Potentially Popular Forex Trading Strategies

—TechRound does not recommend or endorse any financial, investment or trading advice. All articles are purely informational—

Forex trading is one of the most lucrative markets in the world. It continues reaching new heights in terms of daily volume and turnover. According to recent Forex stats, the market sees a daily trading volume of over $6.6 trillion. So, you see, the competition for making a profit is so high, and using the right Forex trading strategies can make the whole difference.


Scalping Forex Strategy


Scalping is a short-term Forex trading strategy that involves making a profit from small price movements and rapid market fluctuations. In this method, many traders buy or sell currencies, hold the position for a very short time, and close it for a small profit. 

Using this strategy requires exceptional decision-making skills and the ability to manage multiple open positions at one time. You can also hire the best scalping brokers who can help maximise your profits. 


Daily Chart Forex Strategy


Daily charts are more preferred compared to other short-term Forex trading strategies. Signals from daily charts are more reliable compared to lower time frames. So, this strategy could result in greater profits. 

First, traders have to find long drawn out moves within the market by studying the price data over the last 3 months. Then, identify the swing lows and highs. Referencing price data on current charts helps identify the market direction. Make sure you save your capital for more lucrative opportunities which drive success in a daily chart Forex strategy. So, this strategy requires patience.


Seasonality Trading Strategy


Traders who use seasonality trading strategy understand that seasonal patterns for price change are predictable. They change every day, week, month, and year at the same time period. This method is highly effective at making nearly-accurate future Forex trends.

Traders can choose from different strategies, such as spread trading, buy and hold; options play, each for different seasons. Although the strategy looks easier to follow, it is still advisable to choose an expert forex broker because they know how the market reacts in different seasons.


Price Action Trading


Also known as technical analysis, there are two different price action trading strategies:

  • Trend following
  • Countertrend trading

Both these strategies work by identifying and exploiting price patterns.

The most important concepts of price patterns are support and resistance. They represent the market’s tendency to bounce back from previous highs and lows. Support indicates a rise from the previous low, while resistance indicates a fall from the previous high.

Forex traders proactively react to lows and highs. During lows, buyers tend towards cheap things. Similarly, during high, sellers are attracted towards what is either too high or buyers try to lock in a profit.

So, current prices are calculated based on recent highs and lows. Moreover, the self-fulfilling aspect to support and resistance occurs because market participants anticipate price actions and act accordingly. Their actions make the market behave as expected. 


Bollinger Band Trading Strategy


As per the Bollinger band trading strategy, traders enter the trade as the price breaks through the lower or upper bands. This indicates that the current trend may continue. This technique is used to identify whether the Forex market is in a bearish pattern or bullish pattern. Generally, this Forex strategy is used to distinguish the oversold and the overbought in the market.  

The Bollinger band indicator uses various groups to figure out the value changes, unpredictability, and drifting lines. In addition, it uses period and standard deviation boundaries. When it comes to default setting, the period is 20 and 2 standard deviations, which you can modify to 40/6, and so forth.

Forex Weekly Trading 

The majority of Forex traders prefer intraday trading because the market volatility provides more opportunities in shorter time frames. However, Forex weekly trading provides more stability and flexibility. This strategy is based on lower position sizes and preventing excessive risks. 

Traders who use Forex weekly trading often use common price action trading patterns such as haramis, engulfing candles, and hammers.

—TechRound does not recommend or endorse any financial, investment or trading advice. All articles are purely informational—