Best forex trading strategy 2023

When it comes to using our forex trading strategy, you’ll find that we have included a number of strategy options which can be used by newcomers as well as experienced online traders. If you have never traded forex online, then this guide will be especially helpful to you. We have dedicated an entire section to outlining the best forex trading strategy for beginners.

If you happen to a veteran of the arts – so to speak – then we have also included a number of more advanced forex trading strategies which can be used in conjunction with your own knowledge and insights. Combining your own trading experiences with a versatile forex trading strategy will enable you to evolve as an online trader and immensely improve your ability to analyse the market and execute trades which are all-encompassing and leverage a wider set of online trading tools and features.

We have gone to great lengths to find a strategy that will enable you to make the most of your trading activities. Be sure to take your time so that you can adopt a strategy which comprises all you require in order to execute successful trades on a more regular basis.

If you are new to online trading, or haven’t engaged in forex trading before, then it is paramount that you find a forex trading strategy which you can use. There are a number of strategies which are tailored for less experienced traders. These strategies are easier to understand and give you a point of confidence whereby you can start trading forex online with less hesitation and more prowess. 

Breakout strategy 

The term breakout in a forex context refers to a currency pair that has managed to break through a resistance area. These resistance areas are detailed on an analysis graph. In order to use a breakout strategy, you’ll need to identify when ‘breakout’ occurs. When such an instance occurs, there is a higher chance of market volatility. As such, it is at this point when you open a position in the respective currency pair and hold your position in anticipation of an upward price movement. Once the volatility within the market subsides, it’s time to close your position. This type of strategy requires a consistent oversight and the ability to execute your trade at the right time. 

Momentum strategy 

As the name suggests, a momentum strategy for forex trading entails buying forex or a forex CFD if the price indicates an upward trajectory. In the same breath, you will close positions where you find the price movement of the currency or currency pair to be in a downward trend. A momentum strategy is no more complicated than that. It’s a good strategy to adopt as a novice forex trader.

Analysing past trends over several months can give you a good idea of what the price movement of a currency or forex pair might be. It’s also a good idea to select a currency which exhibits strong and steady growth. Selecting the best performing currencies and assessing the economic and political situation of the country in question will enable you to trade currencies with the confidence that price movements will be positive for the most part. 

Carry trade strategy 

A carry trade strategy has to do with the difference in interest rates between the two countries of the currency pair in question. The first step is to buy and hold a currency overnight. You are then paid a rate of interest based on the country in question. The essence of a carry trade strategy involves borrowing from the country with a lower interest rate so as to cover your costs of buying the currency of the country with a higher interest rate. 

Such trades using this strategy do possess significant risks. Although it is possible to maximise profits, your positions are usually highly-leveraged and it’s just as likely that you can lose more than your initial capital outlay if the trades take a turn for the worse. It’s best to apply this strategy once you have a grasp on general forex trading and know how best to take advantage of the underlying interest rates.

If you are looking to capitalise on a trading strategy that has a more advanced scope, then look no further. We’ve outlined three additional strategies which are included in the best forex trading strategy. These will provide you with the much-needed insight in order to counter volatile occurrences within the forex market and provide you with the foresight needed to execute trades when necessary. 

Day trading 

When it comes to day-trading, you’ll be looking at engaging in trades on a daily basis. As such, you will not hold positions overnight. The goal behind a day-trading forex strategy is to take advantage of short term fluctuations of the price of a currency or currency pair. For the most part, trades are opened early on and closed before the end of day. It’s important to look out for market inefficiencies and analyse any important factors that may well affect the short-term price of a currency. 

When engaging in day trading, it’s pertinent to remember that you will incur a number of costs associated with opening and closing a large number of trades. As these costs can outweigh the actual profit made on these trades within any given day, it’s important to approach with caution. The success of your strategy will depend on utilising the tools at your disposal as well as correctly analysing markets determinants. Thus, you require the necessary insights and technical know-how in order to make a day trading strategy work for you. 

Scalping 

When it comes to using a forex scalping strategy, you’ll need to engage in numerous trades throughout the day. The nature and success of scalping lies opening various short-term positions and executing trades when the associated profit is at its peak. A position is usually held for a very short amount of time – around 30 minutes. It’s important to take advantage of currency pairs that are very liquid and provide you with smaller spreads. In order to maintain a profitable strategy in this regard, you will be required to open a lot of positions and keep track of the price movements of the underlying asset (currency or currency pair). 

If done correctly, it is the frequency of trades executed rather than profit of each trade that will amount to a noteworthy profit. It’s important to build profit from all positions as opposed to focusing on one or two trades. Thus, it requires a diligent eye and the ability to use all trading tools at your disposal. It can be labour-intensive in terms of the time invested in tracking all trades and ensuring that you buy and sell at the best possible price. 

Position trading 

When it comes to position trading, it is paramount that you have the in-depth knowledge of how markets act in the long run. This type of forex trading strategy will require you to open positions over the medium -to long-term and it’s vital that you understand what factors might affect the price within this time frame. Having a ‘macro’ outlook is thus the order of the day and position trading is a strategy adopted by investors as opposed to day-traders. 

If you don’t have the time required to analyse trades on a daily basis or wish to diversify your short-term trading activities with a longer term vision, then position trading is a good option to look into.

We hope that you have found a valuable resource by which you can improve your forex trading online. We have covered several of the very best forex trading strategies – all of which come with its own set of advantages and inherent risks. It’s important for you to understand the characteristics of the forex trading strategies that you wish to utilise. Without this, it becomes more a game of chance than informed trading. The best way in which to successfully utilise a forex trading strategy is to find one that works for you. If you can align a strategy that works in achieving your own personal trading goals, then you are set. 

Our latest on the best forex trading strategy isn’t the only resource that we included in our index. You can make use of a wealth of insightful guides which will act as the catalyst in your growth as an online trader. For more, take a look at the Fibonacci trading strategy or how to put a price action strategy into motion.