Currency trading can be tricky, but it’s worth learning about as the rewards can be huge. There are plenty of forex trading strategies from simple ones for beginners to highly complicated tactics for seasoned veterans.
For this post, I will highlight some of the basics that every beginner in the forex markets should know about. However, there isn’t a single strategy or formula to this that is a sure winner. It’s all relative and investors must always proceed with caution.
But before diving into forex trading strategies it’s good to note that currencies are affected by global environmental and political events. So you have to always keep tabs on what’s happening around the world. Further, you should also be aware that events can take place while you’re sleeping on the other side of the world that can impact the value of your investment.
1. Always Know When to Pull Out
When you engage in forex trading, it’s a good habit not to leave yours open endlessly for several days. It’s a better strategy to use 30 pips to halt losses while targeting gains of 60 pips per trade.
2. Utilize an Hourly Chart
There are several charts when it comes to forex trading. Most of the time, traders utilize low time frame charts from M1 to M15 for multiple strategies. But professional forex trading starts at H1 and this model will require some prior experience.
So if you’re just starting out and developing your forex trading strategies, start your analysis from the H1 chart and then slowly start learning about the different relationships of time frames in the money chart.
3. Avoid Over Trading
When you’re starting out, as a rule, limit your daily trades. Currency trading isn’t about trading all day or spending all your time studying charts. Just start with a small amount and a handful of trades like using a single lot size where you can see a real opportunity.
Regardless of the type of trading you’re engaging in, always practice caution to limit your exposure to risk.
The Bottom Line
No matter what forex trading strategies that you want to implement, never forget that you’re a beginner. The quick gains you make can also turn into losses if you don’t make informed decisions on currency trades.
Making some gains and maintaining consistency can go a long way to making you a good forex trader. But this will not happen overnight as you will have to gain experience and knowledge as you test the waters in currency markets