The Top 5 Simple Forex Strategies That Work for Beginners

The Best Simple Forex Trading Strategies for Beginners

Ask :what is the best simple forex strategy for beginners...???

Answer: One of the best and simplest forex strategies for beginners is known as the “20 pips per day” strategy. This strategy requires a trader to open two separate trades on the same currency pair, with a 15-pip gap between the open prices. 

Each trade should have a take profit level of 20 pips, and once both target levels are hit, the system is complete and new trades can be opened. Another simple method that includes more advanced technical analysis but still suitable for beginners is trend following strategy. 

This trading strategy looks for price breakouts from support or resistance levels in order to provide entry signals into trends. Finally, there is scalping which involves opening and closing many short-term trades over a small period of time with profits being taken out at regular intervals. 

Forex trading can seem complicated, but there are simple strategies that have been proven to be successful for beginner traders. In this guide, we'll outline five of the best simple Forex strategies that you can start implementing today to improve your trading results.

best simple forex strategies

Strategy 1: Trend Trading

One of the most popular and effective Forex strategies for beginners is trend trading. This approach involves analyzing market trends to determine whether a currency pair is trending up or down.

Once you've identified a trend, you can then enter a long or short position in line with the direction of the trend.

To identify a trend, traders typically use technical analysis tools like Trendline or MACD (Moving Average Convergence Divergence) indicators. By following this strategy, beginner traders can take advantage of well-established market trends and potentially avoid large losses due to sudden market shifts.

 

Trend traders enter a long position when a stock is trending up. An uptrend is characterized by higher lows and higher highs. Similarly, trend traders may choose to enter a short position when an asset is trending down. A downtrend is characterized by lower swing lows and lower swing highs.

Key points

• Trend trading is designed to take advantage of uptrends, where price tends to make new highs, or downtrends, where price tends to make new lows. 
• An uptrend is a series of higher highs and lows. A downtrend is a series of lower highs and lower lows. 
• In addition to looking at swing highs and lows, trend traders use other tools such as trend lines, moving averages, and technical indicators to help identify the direction of the trend and potentially provide trading signals.

Understanding Trend Trading is the best simple forex strategy.

Trend trading strategies assume that a stock will continue to move in the same direction that it is currently trending. Such strategies often contain a limited take profit or stop loss provision to lock in a profit or avoid big losses if a trend reversal occurs. Trend trading is used by short, medium and long term traders.

Traders use both price action and other technical tools to determine the direction of the trend and when it might change.

Price action traders watch price movements on a chart. For an uptrend, they want to see the price move above the recent highs and when the price falls, it should stay above the previous lows. This shows that although the price goes up and down, the overall trajectory is upward.

 

The same concept applies to downtrends, with traders looking to see if price makes lower lows and lower highs in general. When this no longer happens, the downtrend is in doubt or has ended and the trend trader will no longer be interested in holding a short position.

Trend Trading simple forex Strategies

There are many different trend trading strategies, each using a variety of price action indicators and methods. For all strategies, a stop loss must be used to manage risk. For an uptrend, a stop loss is placed below a swing low that occurred before the entry or below another support level. 

For a downtrend and short position, a stop loss is often placed just above a previous high or other resistance level.

Often traders use a combination of these strategies when looking for trending trading opportunities. A trader might look for a break through a resistance level to indicate that he might start a move higher, but would only enter a trade if the price trades above a specific moving average.

moving averages

These strategies involve "entering a long position when a short-term moving average crosses a long-term moving average or entering a short position when a short-term moving average crosses a long-term moving average".

Alternatively, some traders can watch when price crosses a moving average to signal a long position, or when price crosses below the average to signal a short position.

Usually moving average strategies are combined with some other form of technical analysis to filter the signals. This can include watching price action to determine the trend, as moving averages give very weak signals when there is no trend; the price swings back and forth through the moving average.

 

Moving averages are also used for analysis. When the price is above a moving average, it helps to indicate that there may be an uptrend. When the price is below the moving average, it helps to indicate that there may be a downtrend.moving average can be the best simple forex strategy.

impulse indicators

There are many momentum indicators and strategies. Regarding trend trading, an example might include looking for an uptrend and then using the Relative Strength Index (RSI) to signal entries and exits.

For example, a trader can wait for the RSI to fall below 30 and then rise above it. This could indicate a long position, assuming the overall uptrend remains intact. The indicator shows that the price has pulled back but is now starting to rise again in line with the overall uptrend.

The trader could potentially exit when the RSI rises above 70 or 80 and then falls below the selected level.

Trend lines and chart patterns

A trend line is a line drawn along the swing lows in an uptrend or along the swing highs in a downtrend. It shows a possible area where the price could pull back in the future.

 

Some traders also choose to buy during an uptrend when the price pulls back and then bounces higher on a rising trend line, a bearish buying strategy. Similarly, some traders choose to short during a downtrend when the price rises and then falls from a downtrend line.

Trend traders will also look for chart patterns, such as flags or triangles, that indicate a possible continuation of a trend. For example, if the price rises aggressively and then forms a flag or a triangle, a trend trader will observe that the price

Strategy 2: Breakout Trading

Breakout trading is another simple Forex strategy that works well for beginners. This approach involves identifying key levels of support and resistance on a currency pair's chart and entering a trade when the price breaks through one of these levels. The idea is that once a significant level has been breached, momentum will carry the price in that direction, leading to potentially large profits.

To use this strategy effectively, it's important to have a clear understanding of how support and resistance levels work and to set stop-loss orders to protect against sudden reversals in price.

By mastering this strategy, beginner traders can take advantage of short-term market movements and profit from breakouts before they occur.

Position Trading Breakout Strategy: Long-Term Strategy To Build Wealth

Position traders are trend followers. They identify a trend and an investment that will benefit from it, then buy and hold the investment until the trend reaches its peak. Position trading is pretty much the opposite of day trading.

A position trader is generally less concerned with short-term drivers of an asset's prices and market corrections that may temporarily reverse the price trend.

Position traders place more emphasis on the long-term performance of an asset which allows them to hold a position for a long period of time, typically months or years.

 

The breakout position trading strategy is a fusion of the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD) and Directional Movement Index (DMI) to find highly probable and profitable operations.

Whenever the Relative Strength Index (RSI) is combined with indicators like the Directional Movement Index (DMI) and Moving Average Convergence Divergence (MACD), it tends to work even better. You will get a complete trading strategy with precise entry and exit rules

Strategy 3: Support and Resistance Trading

Support and resistance trading is a simple but effective Forex strategy that involves identifying key levels of support and resistance on a currency pair's chart.

These levels represent price points where buyers or sellers are likely to enter or exit trades, causing price movements in either direction.

Traders using this strategy aim to buy at support levels and sell at resistance levels. To effectively use this strategy, beginners should learn how to identify these levels using technical analysis tools like trend lines, moving averages, or Fibonacci retracements. It's also important to consider other factors that could influence price movements, such as economic news releases or geopolitical events. 

With practice and patience, traders can master this strategy and profit from the ebb and flow of the Forex market.

Strategy 4: Moving Average Crossover Trading

Moving Average Crossover Trading is another simple yet effective Forex strategy that can work well for beginners. It involves looking at two moving averages of different timeframes, such as the 50-day and 200-day moving averages, and identifying when their paths cross. 

When the shorter-term moving average crosses above the longer-term moving average, it indicates a bullish trend, while a bearish trend can be signaled when the shorter-term moving average crosses below the longer-term moving average.

This strategy helps traders identify potential shifts in market trends and make informed decisions about when to enter or exit trades.

It's important to note that this strategy works best in trending markets and may not perform as well in ranging ones.

Strategy 5: Price Action Trading

Price Action Trading is a simple yet effective Forex strategy that focuses on analyzing price movements and patterns without using any technical indicators.

Traders who use this strategy rely on their ability to read candlestick charts and identify key levels of support and resistance.

By doing so, they can make informed decisions about when to enter or exit trades based on market sentiment and price action. This strategy requires a lot of practice and experience, but it can be highly profitable for those who master it. Price Action Trading is especially useful in volatile markets where technical indicators may not provide accurate signals.

Price action trading is a simple forex strategy that involves analyzing real-time market prices in order to predict future price movements. 

This type of strategy does not rely on analysis tools such as charts or indicators, instead relying solely on the price movements and patterns occurring in the market. 

By studying the behavior of prices and making informed conclusions, traders can feel confident making trades that may yield profit.