(Akiit.com) Let’s look at the top 5 simple forex trading strategies. These are by no means the only ways to trade in the currency market, but they do give you an idea of how a newbie can start with very little and be making money in no time. Beginners need to keep things as simple as possible, and these five strategies will introduce you to some common themes and help you get off on the right foot. If you already know all about technical analysis and chart patterns, this article probably isn’t for you – check out our advanced guide instead.
The great thing about Forex is that there’s always something happening, so even if none of these conditions hold now, they might do it later on.
Trend Trading
One of the most straightforward Forex trading strategies is trend trading. You identify a currency pair that is trending upwards or downwards and then trade in the same direction as the trend. It can be done by using technical indicators such as moving averages, Bollinger Bands or MACD, or chart patterns.
When trend trading, you need to be patient and wait for the proper setup, and you also need to have a good exit strategy in place in case the trade goes against you. It would help if you also had a stop loss to protect your capital.
Momentum Trading
Another simple forex trading strategy is momentum trading. As the name suggests, this strategy revolves around looking for solid momentum in the market and following that trend. To do this successfully, you need to be fast about your decision making and have a decent grasp on technical indicators such as RSI or MACD. The best way to use this strategy is by identifying a currency pair that is moving intensely in one direction and then finding another pair that may be lagging behind the first pair. You can find good opportunities here by looking at different timeframes. If you’re trading with hourly charts, it’s going to be much easier to spot altcoins moving close enough against Bitcoin than it would be if you just looked at the daily charts.
Accumulation Trading
Another simple forex trading strategy is known as accumulation trading. In this strategy, you look for a strong support level and wait until the price begins to move down towards it – when it gets close enough, you buy-in.
Breakout Trading
In Forex trading, breakout trading is one of the most straightforward strategies out there. You identify a level of resistance or support that appears on your chart and then take your trade either once prices break above resistance or below support. This strategy can be adapted to both trend trading and momentum trading.
Scalping
Finally, probably one of the simplest ways to make money with Forex is scalping – which involves making concise term trades (usually between 1-15 minutes) where you will lock in small profits each time you make a trade.
Bottom line
A new trader with small capital can quickly implement any of the above five simple Forex trading strategies. They are not foolproof and require extensive knowledge of technical indicators and experience, but they certainly give a trader a great place. If you follow all the rules outlined in any one of these strategies, I guarantee that your account will grow. All it takes is practice and patience.
Forex is becoming increasingly popular as more people discover how much money can be made from this market. In 2014 alone, retail forex traders have traded over $5 trillion for the year so far – now that’s what we call an industry. Read this article if you want to know more about simple Forex trading strategies.
Staff Writer; George Poole