Home Forex Strategy 3 easy-to-understand trading strategies for FX beginners – ForexLive

3 easy-to-understand trading strategies for FX beginners – ForexLive

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A couple of trading strategies that are great for beginners


There
are many super successful Forex traders out there and the secret to their
success is that they all share one thing in common – a Forex trading strategy
that works for them.

Of
course, there are many different time-tested strategies out there, all of which
cover a range of technicalities and complexity. It can become very
overwhelming, very quickly. But we’re here to guide you in the right direction
and set you on the path to becoming a true FX pro.

In
this article, we’ll explore three trading strategies that are great for Forex
beginners.

Why is a Forex Trading Strategy Important?

Before
we dive into the nitty gritty of strategizing, it’s useful to understand why
finding a solid trading strategy is important.

Trading
strategies allow all Forex traders, both novice and veteran, to draw important
financial conclusions that will help them identify price movements and market
trends. By being able to spot this data autonomously, traders can make more
accurate price predictions and place trades with more confidence. Without a
strategy, a trader is essentially making blind bets on where they hope the
market is going. And that’s no formula for success.

That
said, it’s also important to note that no trading strategy is infallible.
Traders should use their strategy as a useful guide that can steer them in the
right direction and not rely on it as a commandment that’s set in stone.

Furthermore,
not every trading strategy will work for every kind of trader. That’s why it’s
important to try out different strategies and find one (or a combination of a
few) that suits your trading style and reaps you solid results.

So
with no further ado, here are our top three trading strategies suited for beginners.
You can practice trading risk-free on a LonghornFX MT4 Demo Account, no sign-up
fee required!

1. Trend Following

The
most straightforward strategy for newbie Forex traders to try out is arguably
the Trend Following strategy. Why? As the name suggests, it’s all about
following the up and down trends of the financial market. The trader only needs
to keep an eye on which direction a currency pair’s price is moving. The idea
is to buy a currency pair when its price goes up and sell when it goes down.
The strategy can be applied over a long-, medium-, or short-term.

In
essence, trend following is a strategy that requires careful observation of
graphs, patterns, and changes. It’s a great way for new traders to get to grips
with the ins and outs of the Forex market. It will also help traders begin to
notice correlations between price movements and breaking financial/political news,
data releases, and other anomalies affecting specific economies and their
exchange rates.

2. Trend Lines

For
those who are more technical minded, the Trend Line trading strategy is a great
starting point. The strategy helps traders spot up and down trends by plotting
a straight line that cuts through the many zigzag movements of a trading graph.
And the good news is that these trend lines are pretty simple to draw. All you
need to do is locate two major tops or bottoms on a graph and connect them with
a straight line. It’s important to note that while two markers suggest a valid
trend line, it will usually take three points to confirm a trend.

Of
course, a simple ascending or descending line on a graph is not much help to a
trader. It’s by analysing the context surrounding the lines where things become
more insightful. For example, a trendline that has been in effect for several
months will be of more use than one that covers a few days or so. The angle of
the line is also noteworthy. If a trend line gets flatter, this can indicate
that a market is reaching a peak and may soon head into decline. Conversely, if
a line is getting steeper, it may mean the market is experiencing a bullish
rally, which is a great time to buy. If you can identify market conditions
correctly via the trend lines, you can adjust your trading strategy
accordingly.

3. Breakout

In
order to understand the Breakout trading strategy, it’s important to know two
other trading terms: Support and Resistance Levels. Support and Resistance are
common trading phrases used to describe specific price levels where,
historically, a currency pair has found it difficult to go beyond. Resistance
levels act like a price ceiling, which stops a price from increasing further.
Support, is the opposite, and, as the name suggests, acts as a support level to
stop prices from falling lower.

A
Breakout basically happens when a currency pair finally breaks beyond either a
support or resistance level. Using a Breakout trading strategy is very useful
to a beginner trader as it can help you spot when a new trend is emerging quite
early on, indicating whether now is a good time to buy or sell.  

Put Your Forex Trading Strategy into Practice

Ready
to put your Trend Following, Trend Line, and Breakout trading strategies into
practice?

At LonghornFX, you can
use any trading strategy of your choice on over 55 currency pairs, all with up
to 1:500 leverage. Take advantage of a FREE LonghornFX demo account to practice
and hone your skills before you get started on live trading, from as little as
$10!


TRADE FX NOW

This
article was submitted by LonghornFX.

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