If you are thinking of starting to invest, the chances are that you are already researching the best forex strategies to optimize your results.
For that reason we wanted to write this article and do an analysis on some of the most effective and simple trading strategies.
But before we start, we want to explain to you what a trading strategy is and what its types are.
Forex Trading Strategies:
When we talk about trading strategies we refer to a set of rules or guidelines that traders establish to make decisions about the market.
Now, to trade Forex two types of strategies are used:
Those that are based on a technical analysis . In other words, they study graphic patterns and other indicators to predict price movements.
And those that are based on a fundamental analysis . That is, in the political and economic events that have an impact on the value of the currencies with which we are operating.
Each of these approaches or analysis is just as necessary for Forex trading. So we could say that no strategy is better than another.
However, for traders doing scalping or swing trading technical analysis is more useful . Since they are very fast operations, in a short time. Therefore, there would be no time to do a fundamental analysis.
In the same way, it happens otherwise. If you open positions for a long time , they go from weeks to months. It will be necessary to make a critical analysis of political or economic events that influence the price. Apart from technical analysis.
Now we see ourselves to focus on technical analysis strategies . Since if you are a beginner, it will be more useful to carry out a technical analysis while you are familiarizing yourself with the market.
Forex strategies with MA:
MA strategies are one of the easiest to use and also offer very good results.
Starting from the premise, that the price always tends to its average value . We could say that there are conciliation points between buyers and sellers.
These points are used to draw the so-called moving averages or MA (Moving average).
MAs are one of the simplest indicators to use. And some platforms like Metatrader 4 include it within their functions.
Likewise, they are quite simple to calculate. For example:
We could calculate the arithmetic mean of the last 100 sessions of a currency pair, adding the closing price of each session and dividing it by 100.
The value that we obtain would be the result of the average price in which the price has oscillated during that period of time.
In addition to being an excellent indicator, they also help us to draw trend lines.
That is, lines that indicate the direction in which the market is moving in a given period of time.
As well as, they are useful as a complement to other trading strategies .
Forex strategies with SMA:
This type of strategy also uses moving averages as an indicator of price movement.
It consists of drawing a simple moving average of 12 periods in the timeframe of 15 minutes. Market entry and exit signals appear each time the price crosses the SMA.
When the price crosses above the moving average, a buy signal is given and otherwise , it means a sell signal.
The more you know the market and the more indicators you place, the more accurate the prediction will be.
It is a very simple strategy, but it has very good results if used correctly.
Support and resistance strategy
One of the strategies most used by traders who usually do Scalping or Swing trader, are those that use supports and resistances as a guide to know when to open or close positions in the market.
What they do is basically draw parallel lines where there has been a support zone and a resistance zone in a given period of time.
These lines create a channel, through which the price is expected to move.
This means that the buy or sell operations are carried out only when the price touches the support line or the resistance line.
Since it is expected that when reaching those levels, the movement will reverse and change the direction of the price.
Another important analysis made by technical analysts who use support and resistance to understand price action is:
When the price breaks a support zone, it will most likely turn into a resistance zone.
Although they are basic strategies, they are the best for speculating in the currency market. As well as all the analyzes that derive from them.
And if you are a beginner, our recommendation is that you start practicing in demo and put this knowledge into practice if you want to learn to identify the best moments of entry and exit from the market.