Main talking points:
- What is a Forex Trading Strategy?
- Forex Strategies: A Top-level Overview
- Price Action Trading
- Range Trading Strategy
- Trend Trading Strategy
- Position Trading
- Day Trading Strategy
- Forex Scalping Strategy
- Swing Trading
- Carry Trade Strategy
Discover what type of forex trader is buried within your DNA with our interactive DNA FX Quiz[1]
What is a Forex Trading Strategy?
A forex trading strategy defines a system that a forex trader uses to determine when to buy or sell a currency pair. There are various forex strategies that traders can use including technical analysis or fundamental analysis[2]. A good forex trading strategy allows for a trader to analyse the market and confidently execute trades with sound risk management techniques.
Forex Strategies: A Top-level Overview
Forex strategies can be divided into a distinct organisational structure which can assist traders in locating the most applicable strategy. The diagram below illustrates how each strategy falls into the overall structure and the relationship between the forex strategies.
Forex Trading Strategies That Work
Forex trading requires putting together multiple factors to formulate a trading strategy that works for you. There are countless strategies that can be followed, however, understanding and being comfortable with the strategy is essential. Every trader has unique goals and resources, which must be taken into consideration when selecting the suitable strategy.
There are three criteria traders can use to compare different strategies on their suitability:
- Time resource required
- Frequency of trading opportunities
- Typical distance to target
To easily compare the forex strategies on the three criteria, we've laid them out in a bubble chart. On the vertical axis is ‘Risk-Reward Ratio’ with strategies at the top of the graph having higher reward for the risk taken on each trade. Position trading typically is
