A proverb goes, "Simplicity is the Best". But everywhere? Even in all the most complex and most complicated tasks like Getting married?!
Probably, not probably, but SURELY, The answer will always remain affirmative.
Because, with a simple and effective solution, you can break all most all the odds coming upfront. But when it comes to Forex Trading, you need to add one more word besides simple: PROFITABLE.
So that stands for Simple Profitable Forex Trading Strategies.
While trading foreign exchange, strategies are an obligatory part of it. And if you are hoping for the best forex trading techniques and simple profitable forex trading strategy? I guess this definitive blog is the best option for you.
This quick blog will discover every little detail regarding` simple profitable forex trading strategies. Each of them is a practical and ideal guide in trading. Every beginner trader must follow these instructions.
If you can make yourself comfortable with these effective trading strategies, you are welcome to have some precious trades. But for better results, you should gear yourself up with these advanced tricks.
In this whole blog, we will describe:
Also, we will keep you ahead with the best forex trading guides. Have a look at this:
Well, in this definitive blog, we will try to introduce simple forex trading strategies. The following list starts with:
Breakout, forex trading strategy, is one of the easiest forex trading styles and also it is the best choice for beginner traders. But first, we have to explain the "breakout" to define what really breakout forex strategy is.
Simple, it can be said that a "breakout" is a price movement outside the support and resistance area. When a breakout happens, simply the price increase over the resistance levels. Then it's called a bullish breakout pattern. In other cases, the price decreases the resistance level when you find a bearish breakout pattern.
The support and resistance levels are generated by the market participants themselves. Support and resistance can be horizontal, diagonal or vertical. And they can be created by trend lines, moving averages or other technical indicators.
As the most widespread trading strategy, breakout trading can measure the current market volatility. It can be a beneficial point for the follower of breakout trading strategy to understand the volatility.
The analysis shows the economic fundamental of a country where it indicates its currency is undervalued or overvalued. Traders use this information to overview one currency to another currency, where they analyze how its future value will turn.
The analysis is a complex idea where it involves multiple elements of a country's economic data, which indicates investment trade and upcoming trades. To minimize the fundamentals, traders have to use major indicators.
Here are some critical featured data which impact a country's economy and its currency: retail sales, GDP, industrial production, CPI, inflation, purchasing managers index data, housing data, and more.
A carry trade strategy is marked as a best forex strategy where traders take advantage of the interest rate by the difference between countries. It is undoubtedly essential that the strategy is quite risky enough.
The strategy turns profitable because when traders buy a currency and hold it overnight, it will pay an interbank interest rate. As the system benefits from the difference between rates, it can depend on the leverage.
It's undoubtedly the most popular trading strategy in the financial markets. But the risk is pretty high. That is why it is equally important to know the facts on forex risk management. But most of the time, traders get collapsed by high-leveraged.
Moving average (MA) is one of the best technical analysis tools which create average price data. These average price data can be taken on various periods - like 2 hours to 5 days or weeks or any period a trader chooses.
Moving average (MA) strategies are very familiar to professionals and beginners. Long-term and short-term traders select the moving average strategy as their best option.
There are many reasons why traders use moving average. But the most widespread use of moving average is to identify trend movement and support and resistance level.
When trading signals appear for technical traders, the asset prices go up over the moving average. When the price is above the MA, a trader might sell it as it bounces.
Source: Skrill
Trend trading strategy is one of the easiest and easy-to-understand trading strategies for beginner traders. Side by side, it is widely popular.
The strategy locates the upward or downward price movement of a particular currency and, after that, chooses the entry and exit points of the trade. These points are based on the currency's price between the following price movement trend.
To optimize the price movement trends, trend traders often use moving average (MA), relative strength indicators (RSI), volume measurements, directional indices, and stochastics.
Range trading is a modern way to hold the prices within a stable and suitable price range for a specific time. This strategy works super cool on stable and predictable economic markets. But the currencies do not care n surprise news.
In simple profitable trading strategies, range traders are not dependable on the forex trading brokers but on highs and lows of support and resistance while they put buy and sell. In addition, they often do it in one or more trading sessions.
Range traders use effective trading indicators, including the relative strength index, the commodity channel index, and stochastic, to determine exit and entry levels.
Both momentum trading strategy and momentum indicators are created on the idea that solid price movements follow a specific direction.
Likewise, a weak movement indicates that the trend will go reversal because it lost much of its strength.
Momentum strategy analyzes both price and volume, where it gets connected with such visual analysis tools as oscillators and candlestick daily charts.
Source: Skrill
As we completed the trading strategy list, we will now go for the ultimate trading guides for beginners and experts. Let's dive into it:
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When discussing the forex guides, very profitable forex trading strategies are compulsory. As we discuss a lot about strategies, here are some similar and marked as best forex trading strategies:
If you see very closely, you can find many differences between these strategies. And the most eye-catching conversion is the timeframe. If you look into scalping trading strategy, the timeframe is about 1 to 15 minutes. As an alternative, day trading suggests you close all your active trades with a business day.
But as for swing trading, it takes several days or weeks to open/close a position in trading. At the same time, long-term trading requires a few months to execute trades.
The next task is to justify which trading strategy works better for you. You might choose one or several trading strategies to make your job done. Like some traders use breakout Trading strategies, moving average crossover, carry trade strategy, and other trading indicators.
While others depend on economic news and fundamental analysis, trading with these strategies requires more practice and testing. You can do backtesting to get actual results.
Please take a look at this EUR/GBP trading chart:
As you see on this chart, the EUR/GBP pair has many fluctuations. It has already reached two big peaks and decided to calm down.
Now, at this point, traders might go through with different questions like what kind of strategy works tight on this pair? Was this strategy a reversal trend, or did EUR/GBP go downtrend? What will be the perfect position to start a headstart? How are traders go through the fundamental options or technical analysis?
Clearly, there are multiple questions behind it, but the most important thing to do is what will be the perfect solution for this. I mean trading strategy. Traders need to do testing on demo accounts.
After all, traders will find multiple trading strategies, and from them, he/she will find a certain best one for the trading.
In trading, there will not be a 100% winning rate, or you will not secure that you will win at least 60% of them. You must maintain a risk-reward ratio of 1:2 or higher to earn the minimum profit you want.
For instance, a trader might go for 100 pips from an individual trade, and he/she put a stop-loss below 50 pips from the current market price. It makes sense that around 40% of their trades will get a green line to maintain this risk-reward ratio.
This is undoubtedly a great way to make a successful trading journey and set up a trading insurance policy for you.
At simple forex trading strategies, If you come up with the best risk-reward ratio, there might be some blunders in getting consistent profits. Because you need to set up the best profit target ideas.
In currency trading, individual currency pairs have their fluctuation rates. For example, if you see the EUR/CHF daily chart, you may find the daily pips fluctuate around 50-55 pips.
But for GBP/AUD or GBP/NZD, the daily fluctuations range from 190 to 210 pips. So, you might be thinking that every single currency pairs require different target profits. If you can calculate this math, you make better target profits calculations for your trade.
Leverage is one of the crucial things in forex that someone named it a double-edged sword. Point to be noted that overleverage can cause several losses which can be recovered. In other cases, someone also claims that it returns many profits.
For instance, if you take 400:1 leverage and the market kicks your a** the opened position by 0.25%.
Then you must ready your bag and baggage and wait for the disaster. In almost every case, most traders lose their entire capital to open a trade with some leverages.
Us regulatory claims a 50:1 leverage for the major currency pairs and 30:1 for the minors. Still, if he/she goes for 50:1 leverage, it might get some severe risk in return.
A trader can save him/her by adverse chances of 2% against leverage taken. So, you can imagine the risk inside of it. Knowing how to manage risk; does it really help?
As for those, we suggest having a minimal level of leverage like 1:10 or lower. In case, they can have a slight risk by their side which will not have much effect on their mind.
You can find multiple online trading guides, but nowhere can you find how to invest in a particular trade. Analysts say beginners and experts should avoid investing more than 5% of their capital.
Some professionals believe that the ratio can be increased by 1 or 2%. However, we recommend you move your steps to a maximum of 5%.
For this reason, every five professional traders lose their capital in a short period. For example, if someone risks around 50% of their full money for a single trade and then turns the opposite direction. He/she will lose half of his/her capital, and if the trend is going, he/she might have some left by their side.
As the example shows, the wrong money management system will ruin their entire trading career and lead to the direction of a dark trading journey. So executing your trades with a powerful money management system is essential.
There is nothing worse than something that you ride on a good trading road and do not track your trading records, mainly using simple profitable foreign exchange trading strategies. I am talking about the most exciting trading guide: A Trading Journal. This trading journal will help you to build a solid record of a day/week/month/year.
Also, you can calculate your profits and losses on behalf of a solid trading strategy.
On another side, the most exciting matter is that the trading journal not only shows you insights into your trading records but also motivates you to be a better trader daily.
The monthly result will be countable if the trader manages to recover all of his blunders and gain consistent profits.
The final guide for this list is to stay up to date with the latest economic trends for consistency with yields.
It can be difficult for traders to remember hundreds of forex terms and fundamentals analyses, but they can easily go with the 8 major currencies where they can pay attention to the consumer price index, RSI, and other important figures.
If you want the benefits, please take a look at this daily USD/CAD trading chart:
This trading chart shows that the USD/CAD has had small volatility for several months; someone even called a slow downtrend move. But significantly, the situation changed from January 2020, hitting around 1,000 pips.
This kind of movement does not gross attention to a professional trader who puts his eyes on the technical indicators. However, economic trends are essential to follow. It shows possible entry's for traders.
At the beginning of the covid 19 situation, the oil price fell from $61. The downtrend is putting the Canadian economy down, one of the biggest producers of this commodity. During this period, the bank of Canada cut down the currency rates from 1.75% to 0.25%. That's why currency trading is much less attractive to traders and investors.
As for the fundamental purpose of long-term factors, Purchasing Power Parity (PPP) plays a vital role in the exchange rate.
First, it's pretty visible that a long-term downtrend is placed here where the euro is engaged against the Japanese yen, and as for the period, it's more than 15 months or so.
Besides, the EU central bank is initiating a unique approach by keeping the interest rate SUPER low (near 0%).
On the other hand, the bank of Japan is currently rolling with a -0.1% interest rate.
And suppose you're looking for a perfect explanation behind this action while using simple forex trading strategies. In that case, you might find answers in the purchasing power parity, a PPP indicator, which represents a specific exchange rate where the moderate price of goods and services will equalise (between 2 countries).
Back in the day (in January 2019), the Economist stated that the euro was dominating with an overprice of 29% against the Japanese Yen (according to the PPP interest rate scale). However, instead of outlining a detailed response, the negligence of EUR/JPY (stats from long-term adjustments) and the undervaluation of the yen was addressed globally.
Ultimately, traders who are always ready at wit (staying up to date with the latest economic factors, trading conditions, and technical and fundamental indicators will most likely become successful in Forex online trading.
In the end, one thing is for sure without a perfect forex trading strategy; consistent profits will be tough to get. In this comprehensive guide, we try to bring out all the possible simple profitable Currency trading strategies for you and guide you on how you trade in the real market.
We believe a solid trading strategy with some purest guides will benefit from building a successful trading journey. By considering it, you must play with the numbers, follow the current economic bounces, analysis with the best trading indicators that may cause good trading results. We hope you have a sweet trading journey!
To be on point, choose when and how to Sell. To be precise, one of the most popular strategies is scalping. It entails selling a trade almost immediately once it becomes financially viable. The price target is whatever figure corresponds to "you got rich towards this deal."
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In the particular instance of stocks, traders require volatility, trading volume, and trend transactions. Even though it is difficult to determine that such a form of trade is more profitable than another, most energetic traders favor day trading stocks because of their sustainable profits.
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Breakout trading is one of the most basic forex trading techniques, making it an excellent choice for novices.
Once we're in how it appears to work, let's define "breakout." A "breakout" is any price movement outside of restricted support and a resistance zone.
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The 50 pips per day Currency exchange strategy is an overall strategic approach that continues to operate in single-hour interims and aims to benefit from roughly 50% of a currency pair's daily movement. This method also plans to work with such a limited number of two currencies. GBP/USD and EUR/USD are two examples of these pairs.
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The first main rule of trying to trade is no quick solution to a quick profit. Shareholders should obey a process to achieve their savings objectives, including financial constraints and a strategic plan to match their goals with all those constraints.
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Scalping could be a very successful investment for traders who use this as their central approach or complement other trading kinds. Complying with a strict exit strategy is essential for exacerbating small profits into huge gains. Learn more
