Being a beginner in Trading, you will need to exercise caution in choosing which trading strategies you are going to use at the start of your trading journey. Recent data shows that around 80% of traders lose money in the long run, and the wrong choice of trading strategy is why most traders lose their money, which is usually unrealistic. When trading with forex, you need to have a fair idea about some strategies that can help you trade in a fruitful way.
As a new trader, you can keep the ball in your court by choosing the best trading strategy for beginners. The article below describes some simple and effective trading strategies for beginners.
Choosing the right trading strategies
Technical Analysis Strategy
In the field of Trading, technical analysis is a prediction of price changes in the future based on the analysis of price changes in the past. Many new traders follow strategies based on the results of this analysis. Technical analysis includes the study of chart figures and the identification of patterns.
Mathematical and statistical calculations are often used to convert patterns and figures formed on the chart to determine which patterns can be open for Trading and give advice to the trader.
Trading the News
As a global market, Forex is influenced by financial events. Examining economic news events and their potential impact on currency pairs aids traders in predicting market movements or short-term breakouts (intraday or multi-day). It’s vital to remember that, like any other worldwide trading market, Forex can be influenced by unplanned and one-time occurrences like natural disasters or political developments.
Economic calendars and indices, such as the Consumer Confidence Index (CCI), are used by news traders to predict when and in which direction a change will occur.
Trading the Gap
When trading with candlestick charts, you will occasionally notice a gap that occurs between two candlesticks. A gap is a blank space on a chart that appears between two candles, and Trading with those gaps is called Gap Trading.
The gap will appear when the price of an asset moves sharply up or down with nothing in between. This indicates that the market opened at a different price than its previous close. Typically, this occurs between the close of one day and the opening of the next day.
A pair trading strategy is based on the historical correlation of two securities. The values in a pair trade should have a high positive correlation, which is the main driver of the strategy’s profits.
A pair trading strategy is best implemented when a trader identifies a correlation discrepancy. Depending on the historical notion that the two values will maintain a specific correlation, pair trading can be implemented when this correlation fails.
Trade with Trend lines
Trade with trend lines moves in a general direction in which the value of a financial market or the price of an asset moves. A trend line is an identifiable straight line that connects a sequence of price points and then continues to show support or resistance, depending on the trend’s direction.
Today, trend lines have become very popular to identify support or resistance levels as a form of technical analysis. Thus, it can be a profitable strategy for beginners to trade effectively.
Newbies to the world of Forex can benefit from using the best simple trading strategies that work in Forex because these strategies are relatively easy to follow. They have a reputation for being profitable in the long run, putting the odds on their side. Therefore, it would be best to try various trading strategies and then choose the one that is best suited psychologically. Thus, following the above strategies, you can start forex trading online in an effective way with more profit in return.