One of the most commonly used patterns in Forex trading is the hammer which looks like the image below:. The chart below shows the weekly price action of NZDUSD and examples of the patterns shown above. Source: Admirals MetaTrader 4, NZDUSD, Weekly chart between 19 August to 31 May Accessed: 27 April at pm BST - Please note: Past performance is not a reliable indicator of future results or future performance.

To what extent fundamentals are used varies from trader to trader. At the same time, the best Forex strategy will invariably use price action.

This is also known as technical analysis. When it comes to technical currency trading strategies, there are two main styles: trend following and countertrend trading.

Both of these FX trading strategies try to profit by recognising and exploiting price patterns. When it comes to price patterns, the most important concepts include support and resistance.

Put simply, these terms represent the tendency of a market to bounce back from previous lows and highs. This occurs because market participants tend to judge subsequent prices against recent highs and lows. Therefore, recent highs and lows are the yardsticks by which current prices are evaluated. There is also a self-fulfilling aspect to support and resistance levels.

This happens because market participants anticipate certain price action at these points and act accordingly. As a result, their actions can contribute to the market behaving as they had expected.

Did you know that you can see live technical and fundamental analysis in the Admirals Trading Spotlight webinar? In these FREE live sessions, taken three times a week, professional traders will show you a wide variety of technical and fundamental analysis trading techniques you can use to identify common chart patterns and trading opportunities in a variety of different markets.

Sometimes a market breaks out of a range, moving below the support or above the resistance to start a trend. How does this happen? When support breaks down and a market moves to new lows, buyers begin to hold off. This is because buyers are constantly noticing cheaper prices being established and want to wait for a bottom to be reached. At the same time, there will be traders who are selling in panic or simply being forced out of their positions or building short positions because they believe it can go lower.

The trend continues until the selling is depleted and belief starts to return to buyers when it is established that the prices will not decline further. Trend-following strategies encourage traders to buy the market once it has broken through resistance and sell a market once they have fallen through support. In addition, trends can be dramatic and prolonged, too. Because of the magnitude of moves involved, this type of system has the potential to be the most successful Forex trading strategy.

Trend-following systems use indicators to inform traders when a new trend may have begun, but there's no sure-fire way to know of course. Here's the good news: If the indicator can establish a time when there's an improved chance that a trend has begun, you are tilting the odds in your favour to use the best Forex trading system.

The indication that a trend might be forming is called a breakout. A breakout is when the price moves beyond the highest high or the lowest low for a specified number of days. For example A day breakout to the upside is when the price goes above the highest high of the last 20 days.

Trend-following systems require a particular mindset, because of the long duration - during which time profits can disappear as the market swings. These trades can be more psychologically demanding. When markets are volatile, trends will tend to be more disguised and price swings will be greater. Therefore, a trend-following system is the best trading strategy for Forex markets that are quiet and trending. A good example of a simple trend-following strategy is a Donchian Trend system.

Donchian channels were invented by futures trader Richard Donchian , and is an indicator of trends being established. The Donchian channel parameters can be tweaked as you see fit, but for this example, we will look at a day breakout.

Source: Admirals MetaTrader 4, EURJPY, Daily chart between 18 September to 31 May You can get the Donchian Channel indicator completely FREE in the Admirals Supreme Edition package. It's called Admiral Donchian. To upgrade your MetaTrader platform to the Supreme Edition simply click on the banner below:. There is an additional rule for trading when the market state is more favourable to the Forex trading system.

This rule is designed to filter out breakouts that go against the long-term trend. In short, you look at the day moving average MA and the day moving average. The direction of the shorter moving average determines the direction that is permitted. This rule states that you can only go:. Trades are exited in a similar way to entry, but only using a day breakout.

This means that if you open a long position and the market goes below the low of the prior 10 days, you might want to sell to exit the trade and vice versa. Now let's look at another system that could be the best trading strategy for you. One potentially beneficial and profitable Forex trading strategy is the 4-hour trend following strategy which can also be used as a swing trading strategy.

This strategy uses a 4-hour base chart to screen for potential trading signal locations. The 1-hour chart is used as the signal chart, to determine where the actual positions will be taken. Always remember that the time frame for the signal chart should be at least an hour lower than the base chart. For this Forex strategy, two sets of moving average lines are chosen for the best results.

One will be the period MA, while the other is the period MA. To ascertain whether a trend is worth trading, the MA lines will need to relate to the price action. The MA lines will be a support zone during uptrends, and there will be resistance zones during downtrends.

It is inside and around this zone that the best positions for the trend trading strategy can be found. Below is a daily chart of GBPUSD showing the exponential moving average purple line and the exponential moving average red line on the chart:.

Source: Admirals MetaTrader 4, GBPUSD, Daily chart between 4 September to 31 May Counter-trend strategies rely on the fact that most breakouts do not develop into long-term trends. Therefore, a trader using such a strategy seeks to gain an edge from the tendency of prices to bounce off previously established highs and lows. On paper, counter-trend strategies can be one of the best Forex trading strategies for building confidence, because they have a high success ratio.

However, it's important to note that tight reins are needed on the risk management side. These Forex trading strategies rely on support and resistance levels holding. But there is also a risk of large downsides when these levels break down. Constant monitoring of the market is a good idea.

The market state that best suits this type of strategy is stable and volatile. This sort of market environment offers healthy price swings that are constrained within a range. It's important to note that the market can switch states. For example, a stable and quiet market might begin to trend, while remaining stable, then become volatile as the trend develops. How the state of a market might change is uncertain.

You should be looking for evidence of what the current state is, to inform you whether it suits your trading style or not and should be one of the Forex strategies you should be using. Source: Admirals Demo Account Example. Many types of technical indicators have been developed over the years.

The great leaps made forward with online trading technologies have made it much more accessible for individuals to construct their own indicators and systems, as we've gone through in these trading strategy guides. You can read more about technical indicators by checking out our education section or through the trading platforms we offer. The best Forex trading strategies for beginners are the simple, well-established strategies that have worked for a huge list of successful Forex traders already.

Of course, many newcomers to Forex trading will ask the question: Can you get rich by trading Forex? or: What is the best Forex strategy that always wins? It's important to understand that trading is about winning and losing and that there is always risk involved. In some cases, you could lose more than your initial investment on a trade. There are no easy Forex trading strategies which are going to make you rich overnight, so do not believe any false headlines promising you this.

Trading Forex is not a 'get rich quick' scheme. However, through trial and error and the use of a demo trading account, you can learn about the Forex market and yourself to find a suitable style. It can also help you understand the risks of trading before making the transition to a live account. Traders that choose Admirals will be pleased to know that you can trade in a virtual environment by opening a demo trading account. Instead of heading straight to the live markets and putting your capital at risk, you can practice your Forex trading strategies on a FREE demo account.

This is a great way to help you find the best trading strategy for yourself and the trading strategies that will help you become successful. You can open a FREE demo trading account in just a few minutes and access a range of additional trading indicators and software complimentary. Admirals is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8, financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5.

Start trading today! This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

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Tim Fries is the cofounder of The Tokenist. He has a B. in Mechanical Engineering from the University of Michigan, and an MBA from the University Meet Shane. Shane first starting working with The Tokenist in September of — and has happily stuck around ever since. Originally from Maine, All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team.

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Click here for a full list of our partners and an in-depth explanation on how we get paid. The year was a roller coaster—so much so that the trends set in forex then have not really stopped to this day.

Millions have entered the market this year just in the U. This competition has made the present moment a perfect time to start trading quickly and cheaper than ever. Some are very beginner-friendly and can make you your first profits today, while some take more time to master but will bring pure joy and material gain once you figure them out.

The key to being a successful trader is knowing how to predict whether prices are going up or down. If you have the necessary knowledge, then you only need a starting capital as well as a good forex broker to invest through. However, forex is not like that. Exchanging currencies is all about noticing small opportunities and exploiting them quickly. Mastering a simple strategy will allow you to make correct predictions and profit most of the time unless a black swan event like COVID happens.

But even then, if you can adapt quickly, you will make an even greater profit. Randomness and chaos affect all traders, and the more confused they are, the more opportunity you have to strike gold. One more huge benefit of knowing about strategies is that all traders use them.

Take a look at our report on the leading forex brokers in the US. The best strategies are those that work, have always worked, and will continue to work in the foreseeable future.

We will now list and explain these strategies and rate how beginner-friendly, time consuming, and risky each one is. This strategy consists of looking at a price chart and finding the so-called resistance and support lines. You can make a resistance line by looking at the highest price points over a certain period and connecting them with a straight line. You can think of a resistance line as an upper price limit of a currency pair—if the price goes beyond it, that means that traders have overbought and that the price will drop very soon.

The support line is just the exact opposite of the resistance line. You just take all the points on the chart where the price dipped and draw a straight line through them. As you can see from the bottom part of this graph, the blue boxes represent peak prices and the red ones represent bottom prices. This tactic only works if the markets are stable and passive. If the prices are going up or down, you need a different approach, and if the prices are too volatile, using range trading might prove impossible.

Nonetheless, this strategy is recommended for complete beginners who are just getting introduced to forex trading. Unlike range trading, this strategy uses price trends to find buying and selling opportunities. Here you must also find the lowest lows in the price chart and the highest highs.

Then you should draw lines through them and that will represent the price trend—this can either be an upward or downward trend.

So, if the highs are steadily getting higher and the lows are steadily getting higher, this is an upward trend. That tells you you should buy the currency pair when it dips and sell when the price surpasses the latest high point—or you can hold it for a while and sell when the price grows a lot. Naturally, the approach is the opposite if you have a downward trend on your hands. If the answer to all these is yes, you usually have a steady upward trend on your hands and you can exploit it.

This is a long-term strategy that requires fundamental analysis but also following macroeconomic trends and relevant news. As you can see in the graph above, the places where the prices stay very high for a long time are the head and shoulders points. Finding these areas and drawing a line through them can tell you where the prices are going. In this example, we can see the Germany 30 index. An important thing to note is the effect that Brexit had on the movement of the price trend—you need to analyze charts and follow the news just so you can take major economic events into your calculations.

Check out the top forex trading apps for mobile access to the forex market. Day traders open and close all their positions during the same trading day—nothing is left to sit overnight. This strategy is all about finding small daily price fluctuations, buying low, and selling high. Trades are executed in a matter of hours, if not minutes, and you usually cannot make high returns on any single one.

However, a few trades every day will start to pile up if you do them right—and you will amass enough capital to make every trade count. This chart shows all price dips throughout a single trading day. Upward trending financial instruments are always a good target for day traders.

This makes leveraging your trades more viable as the risk-reward ratio is manageable. Scalping is as time-consuming and profitable as you want it to be. Individual trades are usually opened and closed within a few minutes but you can make as many of these as you want throughout the day.

First, you must identify a trend as you would when trend trading—make sure that the price highs are growing and that price lows are moving up as well. Then, you should buy the dip, hold as the upward movement has momentum, and sell as soon as prices reach the resistance line.

This is similar to trend and range trading, but swing traders inspect price trends in a smaller time frame and close trades within a few hours or days.

Because swing trading is a short-term strategy, traders only need to focus on price analysis rather than long-term macroeconomic trends and important global developments. This makes swing trading simpler but also relatively risky since price changes are always more hectic on a day-to-day basis. If both the high and low price points are moving up together, this means you have an upward trend on your hands and that you should enter a long position. If the opposite were true, shorting would be the way to go.

This means borrowing one currency at a low rate and then investing in another currency that provides a higher rate. Doing this will produce a positive carry on the trade—hence the name. This means that profits can be small but also substantial, it all depends. Since carry trades usually involve leverage , they have the potential to be very risky. To make a good trade, you need to look at the fluctuations in interest rates over a medium to a long period months or even years.

Ideally, you should borrow a currency that has a low, declining interest rate and get a currency that has a high, increasing rate—that way your profits will be as good as they can be.

If you want a fresh and popular strategy with a clear daily financial goal—then the 50 pips a day forex strategy is it. GMT, after the candlestick closes, traders enter two opposite positions with pending orders. When one order gets triggered by a price movement, the other one gets canceled automatically. The orange box in the chart above represents the 7 a. candlestick point that is crucial for this strategy.

Naturally, forex brokers have been competing to pick up as many of these newcomers, making their services even cheaper and more accessible than before. Forex brokers offer many different financial instruments—currency pairs, cryptos, CFDs, spreads, etc. You want a brokerage that offers what you need, is safe, has a great trading platform, and most of all—dirt cheap.

Some of the top forex brokers in the US, as well as many top UK brokerages, fit that description perfectly. Once you find your perfect match, signing up is easy and fully digital. You just need to give the broker some personal info and make a small deposit sometimes that deposit is zero.

Almost all forex brokers have demo accounts. These are training accounts you can use to practice trading with virtual money instead of real cash. This is a great way to learn how the platform works and see if your analytical ability is providing results.

Some brokers offer great educational content that can bring you from zero to hero in no time—check out what the top forex brokers for beginners have in store for new traders. Analyze the markets to find a good opportunity, open a trade, and set stop and limit orders. Learn about the ascending triangle. Opening a trade before researching the market is not what you want to do.

The prices of different currencies might depend on completely unrelated factors because they are governed by different banks, institutions, and market conditions. Forex is traded in an over-the-counter market OTC —this is a system of banks that hold copious amounts of currencies and sells them to traders and buy from them directly.

Since banks have huge appetites, this means you can always find a buyer and seller for any sensible trade you wish to make. The big banks that make up this forex network are called market makers for apparent reasons—they literally created the market—and they are spread across 4 major forex centers: Tokyo, Sydney, London, and New York. Since these centers span all time zones, traders have hour access to the global forex market and can trade whenever they wish.

Take a look at the most popular UK forex brokers. Many factors can affect the price of a currency—some are impossible to predict, but most can be anticipated if you just follow the right news. The image above illustrates some of the main factors you can look at to analyze forex price changes. There are inherent risks to trading forex, and some that can leave you penniless before you even start trading.

Since you need a lot of money to make significant profits with forex, brokerages can lend you money through margin trading. This means you can borrow up to 10 or even times your account balance and make a trade.

This goes double for the time we live in—fraudsters have become creative in the COVID era and thousands of unsuspecting traders have fallen for never before seen tricks.

You can read more about technical indicators by checking out our education section or through the trading platforms we offer. The good news is aspiring Forex traders can access dozens of online Forex trading classes, promising a learning path to profitable trading. Accessed: 27 April at pm BST - Please note: Past performance is not a reliable indicator of future results or future performance. com, a well-respected, authoritative Forex website providing daily Forex news and analysis since , started FX Academy with the goal of providing traders of all experience levels with the skills and knowledge they need to succeed in the world of Forex at no cost. All you need to do at eToro is switch your account from 'real' to 'virtual'. Weekly Forex trading strategies are based on lower position sizes and avoiding excessive risks.

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