Top 5 Forex trading strategies

Olymp Trade Team

1️⃣ Trend indicator strategies

Trends are your friend. A trader earns money depending only on the distance an asset price covers after being purchased. The greater the distance, the greater the profit.

Unfortunately, the market is in a trend phase only 30% of the time. The biggest challenge for traders is finding an entry point into a trade at the beginning of a trend movement. Trend indicators often lag somewhat behind real time, but using the right combination of them often provides excellent opportunities for opening trades.

However, it’s not necessary to use a large number of indicators at the same time. For example, there’s a lot that can be understood about when to act on an asset’s price with Simple Moving Average.

2️⃣ Oscillator strategies

The remaining 70% of the time, the market is in a sideways phase. Here, oscillators come to the rescue — they help to find reversal points and can even predict them in advance.

In a sideways trend, we can make a profit from price differences as well as we can during trends. If we set bigger timeframes for the oscillator, such as four hours or one day, then we can more easily make a profit from the price difference, even if the price structure is the same as we’d see in a shorter time frame. There are many different kinds of oscillators, each with its own purpose in trading.

3️⃣ Price action

Price action involves the use of repeating graphical price patterns to obtain or refine signals. One of the most effective and simple strategies in Forex trading is breaking through support and resistance levels as well as trendlines. Be sure to read our article on breakouts to adopt this strategy.

If you want to increase your chances of a successful trade, then use the price action strategy as an additional way to clarify signals when trading.

4️⃣ News trading

When trading, it is very important to keep an eye on the fundamental background of the assets. If you enjoy trading currency pairs, then be sure to pay attention to news that affects the prices. Some news may cause increases and decreases in price once published, while others may initiate trending movements. Our article on the basics of news-based trading will tell you everything you need to know to get started with this strategy.

5️⃣ Pairs trading

Probably the most complex but least-risky trading strategies are market-neutral trading strategies. A striking example is pairs trading, which requires a combination of deep fundamental analysis, asset correlation and possibly statistical analysis. Adopting these strategies requires a deep understanding of the market, but in skillful hands, they can bring a decent profit with minimal risks.

Conclusion

There are a great many Forex trading strategies, ranging from the simplest ones that use only one simple indicator to trading algorithms at the intersection of technical and fundamental analyses. All of them have their advantages and disadvantages, so we suggest focusing first on what seems most understandable and logical to you, then periodically trying out new methods.

It’s worth noting that incorporating top Forex trading strategies into your trading style makes up only part of a trading plan. You need to determine for yourself the trading style that suits you best, whether it be position trading, swing trading, day trading or scalping. A trading plan will also include risk management and money management, trading strategies and psychological control. You’ll eventually combine these in a way that suits you after time and experience, and in the meantime, both beginners and experienced traders can always practise new strategies on a demo account to get it all figured out. Some ideas we mentioned in this article may have encouraged you to create your own unique trading strategy, because the way of the trader is always the way of searching for new horizons.

Risk warning: The contents of this article do not constitute investment advice, and you bear sole responsibility for your trading activity and/or trading results.