Forex Trading Strategies for Beginners

It’s usually said that a beginning trader is closer to growing to be consistent profitable than a trader who was trading unsuccessfully for a long time. This is because a newbie trader hasn’t had time to create any bad habits. The trader who has been having difficulties for a long time has to not just find what works best for them, in addition they need to break any bad habits and put aside negativity they may have built up through the years.

There are various Forex trading strategies. However, there are several basics of reading a price chart you’ll want to know before you can move on to learning any one strategy in-depth. Let’s cover the fundamental building blocks of trading the Forex market from the technical analysis method:

Support and Resistance levels

support and resistanceSupport levels are created as a market turns higher. So, if a market is moving lower for example and it then changes direction and begins shifting higher, it either has established a level of support or bounced off a previously existing level of support.

Resistance levels are created as a market turns lower. So, if a market is moving higher as an example, and it then changed route and beings moving lower, it either has created a level of resistance or bounced off a previously existing level of resistance.

Identifying and plotting support and resistance levels is as simple as no means an exact science. Instead, it will take the usage of the discerning human eye and a bit of brain power…don’t be worried though, it’s really not that difficult to become proficient and assured in drawing support and resistance levels on your own charts.

 

support resistance on chart

Now, an important point that I want you to know about support and resistance levels is they aren’t concrete. Many traders appear to think support and resistance levels are concrete and they should not trade a setup if there is a support or resistance level close by, this can result in them getting analysis paralysis rather than entering a trade. While it is true that you need to take into consideration the key support and resistance levels in the market, additionally you may need to look at the overall market condition. You see, in trending markets, support and resistance levels are frequently broken by the trend momentum; so don’t be afraid of support and resistance levels, as they will frequently break. Instead, watch these levels for trading signals. You see, when a Forex trading signal like a price action setup forms at a key support or resistance level, it is a very high-probability even to take notice of.

 

Trend trading

trend tradingTrending markets provide us the best possibility to profit, because the marketplace is clearly going into one general direction; we can make use of this information to our advantage by seeking to go into the market in direction of the trend.

An uptrend is marked by a number of higher highs and better lows, and a downtrend is marked by a number of lower highs minimizing lows. Remember that trends do end, as we can see in the daily EURUSD chart below, the downtrend comes to an end recently following the pattern of lower highs and lower lows was broken…

 

Counter-trend trading

counter trend  Since trends do finish, we are able to also take advantage of this information. However, counter-trend trading is inherently riskier and much more difficult than trading using the trend, so it must only be attempted once you’ve fully learned trading with the trend. A few of the factors to consider inside a good counter-trend signal is a price action pattern or setup forming at a very obvious and ‘key’ support or resistance level on the daily chart, see here:


 

Forex candlestick charts and patterns

price patterns and candlestick

We discussed Forex charts, but as they are necessary for the way that we, I needed to give them a little more time.It’s important to realize that candlestick patterns have certain terminology all to their self that you ought to understand before you make an effort to master a trading strategy like price action.

 

 

Pin Bar Trading Strategy

pin bar strategyThe pin bar trading technique is perhaps the best Forex technique for beginners. This is because it’s a really obvious pattern, making it easy to identify on a chart. It’s also one of the simpler strategies to trade.

See the way the market arrived to resistance during a rally but was soon able to break using that resistance. One of many basic principles of technical analysis is that former resistance becomes new support. Sure enough the market found support at former resistance and formed a bullish pin bar along the way.

 

 

Forex Breakout Strategy

breakout tradingThe Forex breakout strategy we’re likely to discuss here is a great trading technique for beginners. This strategy differs from most of the conventional breakout strategies on the market. Rather than simply trading the particular break of a level, we’re awaiting a pullback and retest before entering.

Another difference here is that we’re only thinking about breakouts that occur from the wedge pattern rather than a horizontal level.

That’s it. Several simple Forex trading strategies for beginners. These methods are undoubtedly my personal favorite and even for good reason. If used properly, they are able to quickly construct your trading account right into a significant amount. The best part is, they are extremely simple to understand and are therefore simple to incorporate to your trading plan.

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