5 Simple Forex Trading Strategies for Beginners.

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Did you just begin trading Forex or Fixed Time Trades today?

If Yes, then you are in the right place. You will definitely get what you are looking for in today’s post.

Might a simple trading strategy be the thing you are looking for? Of course, it is, and you know what? You will not only get one but a whole five of them.

Introducing 5 Simple Forex Trading Strategies for Beginners;

  • Moving Average Strategy.
  • Price Bounce back Strategy.
  • Breakout Strategy.
  • Support and Resistance Strategy.
  • Martingale Strategy.

1. Moving Average Strategy.

Moving Averages can be used to create a very robust trading strategy. Say for example you use two moving averages, one with a shorter and another with a longer period.

These two moving averages can be used in a variety of ways as a strategy.

Moving average crossovers, price action in relation to the moving averages and the use of an additional indicator like the Relative Strength Index (RSI) can form a complete trading strategy.

Buy after meeting all the conditions below;

  • The shorter period Moving Average crosses over the longer period Moving Average from below upwards.
  • The price keeps trending above that shorter period Moving Average.
  • The RSI may be showing a reading below its lower limit or an increase in value from below upwards.

Sell on meeting all the conditions below;

  • The shorter period Moving Average crosses over the longer period Moving Average from above downwards.
  • The price keeps trending below that shorter period Moving Average.
  • The RSI may be showing a reading above its upper limit or a decrease in value from above downwards.

Exponential Moving Averages are preferred because they refer to the most recent data in their calculations.

 
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2. Price Bounce Back Strategy.

Prices will tend to rise or fall away from Moving Averages but when they hit the EMAs (especially shorter period moving average), they bounce back.

For example, let us say you had applied a 9 period and a 21-period Exponential Moving Averages. The price crosses the two moving averages and begins to trend above them. EMA 9 also crosses over EMA 21 to be above it and closer to the up-trending price.

The price is trending upwards and chances of the price going up are higher than the chances of the price falling.

Therefore, if the price falls to the point of touching EMA 9 or even better still EMA 21, then you would be better suited to enter a Buy position because that price will bounce back off that level upwards. You need to be patient so that you do not enter a position before the price touches the EMAs.

The same thing applies if the price crosses to trend below the moving averages and EMA 9 crosses over EMA 21 to be below it and closer to the down-trending price.

The price is trending downwards and there are more chances of it falling than rising.

If it happens to rise to the point of touching EMA 9 or EMA 21, then a Sell position would prove profitable because the price is most likely to bounce back downwards.

3. Forex Trading Strategies for Beginners – #Breakout Strategy.

The price of an asset moves in certain patterns and channels whose limits can be determined.

By observing, determine a level where the price does not tend to go past upwards and downwards based on past action of the price.

Breakouts combined with a technical indicator like the Relative Strength Index (RSI) could form a reliable trading strategy. Let us see how I mean.

Buy positions must meet all the conditions below;

  • The price will have broken the upper predetermined limit.
  • Prices will have tested the new level several times without breaking it back downwards.
  • The RSI may be showing a reading below its lower limit or an increase in value from below upwards.

Sell Positions must meet all conditions below;

  • The price will have broken the lower predetermined limit.
  • The price will have tested the new level several times without breaking it back upwards.
  • RSI may be showing a reading above its upper limit or a decrease in value from above downwards.

4. Forex Trading Strategies for Beginners – #Support and Resistance Strategy.

Support and Resistance are certain predetermined levels of the price of an asset at which prices tend to stop and reverse.

While support is a low level on the price chart where prices don’t tend to go past downwards but pause and reverse upwards; resistance is a high level on the price chart where prices don’t tend to go past upwards but pause and reverse downwards. By observing, spot those levels.

A combination of Support and Resistance with and an additional tool like the Moving Average Convergence and Divergence (MACD) can be used as a complete working trading strategy.

For you to enter a Buy position;

  • The Price will be at the support level, having tested the level severally without breaking it downwards.
  • The MACD will be showing a reading below -100 / crossover of its faster-moving average above the slower moving average or crossover of its moving averages above the zero line as well as the histogram bars shifting from below to above the zero lines.

For you to enter a Sell position;

  • The Price will be at the resistance level, having tested the level severally without breaking it upwards.
  • The MACD will be showing a reading above 100 / crossover of its faster-moving average below the slower moving average/crossover of its moving averages below the zero line as well as the histogram bars shifting from above to below the zero lines.

5. Forex Trading Strategies for Beginners – #Martingale Strategy.

One Money Management strategy would be okay after having had 4 trading strategies, right?

The Martingale Trading Strategy is a money management strategy in trading. It is basically a trading method that involves increasing your trade size or amount when you lose. However, if you win the doubled trade, you revert back to the initial capital.

The strategy aims at recovering capital that has been lost in the previously lost trades by increasing payout or gains.

This is because the more capital you invest, the more profits you gain.

Let us say for example your trade size was $10. You stake $10 and lose. Try doubling to $20. If you still lose, double to $40, and so on.

If the returns were 80% per trade, then finally you earned $32. That has already recovered the $10 plus $20 you lost in the first unsuccessful trades and earned you an additional $2. Then revert back to $10 and trade again.

You can, therefore, employ this strategy while trading any of the above four. Remember you should have enough capital in your account to be able to double and also remain with enough capital to continue trading even if you lose a doubled down trade.

Conclusion.

Have you mastered any of the five strategies? Then you are not a newbie trader anymore. You have graduated to become an intermediate level.

Happy trading.

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*Risk warning:

The information provided does not constitute a recommendation to carry out transactions. When using this information, you are solely responsible for your decisions and assume all risks associated with the financial result of such transactions.
 

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