Trading on the forex market is extremely easy for beginners, as you only need to follow a few steps to get started.
By finding a secure platform where you can conduct FX trading, opening an account on that site, and then adding money into your account, you are all set to become a real trader.
The issue is that signing up on a forex platform is not enough to make money through this endeavor. You must have a coherent and winning strategy if this hobby or part-time job is to be worth your while.
Below are the ten best forex trading strategies for beginner and intermediate traders in 2022.
1. Bollinger Band Strategy
The Bollinger Band strategy involves assessing support and resistance levels for the currency pairs that you are investing in within the forex market. The concept is that you must identify the points where the price of a currency is going beyond its usual limit. As you understand that limit, either high or low, you can decide whether to take up the appropriate short or long position to make a profit on your trade.
2. Momentum Indicator Strategy
Another useful forex strategy is the momentum indicator. Such an indicator assesses the most recent closing price of a currency pair and then compares it to the past few closing prices. Analysts can map such information onto a chart, showing the momentum of a currency pair in recent weeks and months. Traders can use that momentum to determine how they believe the pair will move in the coming days and weeks.
3. Bladerunner Strategy
The Bladerunner strategy within the forex market focuses on the current market price versus the price that the indicator suggests. The idea is to assess whether the present value of a currency pair is more or less than what the indicator expects, based on the past and historical performance of the currency pair. Traders can then decide their next move by assessing candlesticks, pivot points, and other valuable data about the currency pair.
4. Fibonacci Strategy
A very popular trading strategy among forex enthusiasts, the Fibonacci strategy refers to using Fibonacci retracements to understand a currency pair’s support and resistance levels. These retracement levels can be drawn on the asset’s price chart, with three drawn at the highest point, the lowest point, and the average between the two. Three more are drawn at specific percentages within the Fibonacci sequence.
5. Assessing the Political Climate
The political climate within a nation can significantly impact the value of its currency. If there is any political instability, people tend to move their money out of a nation, which can lead to its currency experiencing a decline in value. Similarly, nations that have great political conditions are likely to attract more foreign investment, which boosts the value of their currency.
6. Using Economic Indicators
One of the most pertinent ways to trade in the forex market is to understand how a nation’s economy can impact the value of its currency. Traders must learn how unemployment, inflation, interest rates, GDP, and other economic factors can lead to a currency rising or falling in value. Major currencies like the US Dollar are also impacted by world economic events.
7. Comparing Seasonal Rises and Drops
Using historical data from the past one or two decades, forex traders can understand whether currency pairs have any seasonal behavior that repeats most years. Certain currency pairs may rise or fall every specific month, which allows traders to enter advantageous positions as they anticipate such a move in the present year.
8. Moving Average Crossovers Strategy
Advanced forex traders may want to consider the Moving Average Crossovers trading strategy, which involves the meeting point of two standard indicators. To pick trading opportunities, traders assess two moving indicators, the fast-moving average, and the slow-moving average. Traders enter long positions if the fast MA crosses the slow MA from below, while they go into a short position if the fast MA crosses the slow MA from above.
9. MACD Strategy
The MACD strategy refers to moving average convergence divergence. Such a strategy aims to use the MACD to understand when a trend is ending, and a new one is beginning.
10. Keltner Channel Strategy
The final trading strategy for forex in 2021 is the Keltner Channel trading strategy, which uses a specific formula called the Keltner Channel to understand when the currency pair is veering away from its moving average.