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The Best Forex Trading Strategies For Beginners

Forex trading strategies can seem complex to traders just starting out. However, the best forex trading strategy provides clear entry and exit points and leaves room for proper risk management.

Here is a closer look at how to develop a forex trading strategy as a beginner and the methods for testing and perfecting it.

The best forex trading strategies for beginners

What are the best forex trading strategies for novices? This depends on your market of choice, the indicators you use, and risk tolerance. Below are some popular and simple forex trading strategies for beginners.

Scalping

Scalping focuses on small market movements within a trading day. The strategy involves opening many small trades that last for seconds or minutes. Here’s the rundown:


Scalping typically involves using several different buy signals, like Candlestick charts or other indicators, so you can be sure the market is headed in its expected direction.



Scalping limits exposure to unpredictable market factors, though it can be time-intensive.


Position trading

What is the best forex trading strategy for those who want to avoid reading charts and indicators? Unlike scalping, position trading does not consider minor market price fluctuations. Instead, it focuses on other fundamental factors affecting asset prices — ideal for beginner traders who do not want to engage with comprehensive chart analysis.

Here’s how traders practise position trading:


Position trading aims to capture larger profits from long-term trends while ignoring short-term swings.



Traders will hold a position for hours or days as an economic, political, or policy unfolds.



Position trading allows you to open and focus on one position instead of constantly seeking new opportunities.



Because you have to ride out short-term price fluctuations, this strategy requires leverage.


Trend and range trading

A trend trading strategy involves finding opportunities when the market is moving in specific directions. These strategies are based on the expectation that the forex market will often behave in a certain way and that past trends and price actions can help to forecast future events.

Here’s how it works:


Trend lines connect the tops or bottoms of price waves to determine which direction the market is moving and if the tops and bottoms are moving parallel and forming a range.



Traders then use indicators like moving averages (MAs), the average directional index (ADX), and the Relative Strength Index (RSI) to decide if the trend will continue when it approaches the trend line.



If the indicators send the right signals, the trader can open their position with the expectation that the market will soon move in the opposite direction.


Keep in mind this forex trading strategy requires careful risk management. Traders must place stop-loss orders on the other side of the trend line to avoid excessive hits.


Breakout trading

Breakout trading involves trendlines. However, unlike range and trend trading, it waits until the market breaks through the trend.
The aim is to enter a trade once the price breaks out of its usual range. Breakouts often mean that a significant price move is imminent.
Breakouts can lead to larger profits than scalping or range trading, but these situations are often volatile, so traders must set up stop-loss orders as soon as they open the position.
Breakouts usually require a high trading volume.
Traders can confirm the breakout by looking for a spike in volume when the price crosses the trend or range line. If there is no increase in the number of trades, it could be a false breakout, and prices could drop0

Markets for beginners to trade

Aside from the forex market, leverage can be used in trades involving:

Indices
Energies
Metals
Shares
Cryptocurrencies

Choose J&J PARTNERS as part of your forex trading strategy

J&J PARTNERS is a regulated broker offering CFDs that track assets across several markets.

We offer access to MetaTrader 4, a platform that can provide you with all the tools necessary to build simple forex trading strategies and add more sophistication to your trading as your knowledge grows. We also offer transparent pricing, fast order execution, and the ability to choose the amount of leverage you use.

   

If you are a new trader, visit J&J PARTNERS to take a closer look at our forex trading features and why we stand out from other brokers.

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