Experts say that 10% of the traders make a profit, while the remaining 90% lose their capital in the first week. The main cause for this loss in Forex trading is traders’ fails to follow the Forex trading strategies. They often show interest in social trading or copy trading without analyzing that strategies differ from person to person. You may generate short-term profits by copy trading, every trader must create their own trading strategy if they wish to make a long-term profit. Further, in this blog, let’s have a close look at top Forex trading strategies for consistent profits.

What is Forex Trading Strategy?

Simply, Forex trading refers to the buying and selling of currency pairs and others to make profits or hedge businesses against unfavorable exchange rate movements. While Forex trading strategy lets you decide when to buy or sell a currency pair. It includes studying the fundamentals like market environment, economic data, and technical factors. Some of the widely used Forex trading strategies are Price Action Trading, Position Trading, and Day Trading.

There is not only one most profitable Forex trading strategy. Forex trading strategies are unique to each trader. While selecting the best Forex trading strategy for yourself, you should consider whether you are a short-term or long-term trader, your risk appetite, and your trading style.

Top Forex Trading Strategies

Every successful Forex trader has their own trading strategy. There is a multitude of trading strategies. How do you consider the strategy a profitable one? Simply, the profitable strategy is the one that makes consistent profits most of the time, which is apply. Thus, the trader first looks for the best Forex trading strategy that suits their trading personality. After finding the strategy they simultaneously test till they are satisfy, the result will be consistent and reliable. At the same time, your trading strategy should be consistent in making winning trades and reliable to do in various market conditions. Further, let’s see Forex trading Strategies that really work for traders.

Price Action Trading

This price action trading is one of the best Forex trading strategies as it includes studying the historical exchange rates and deciding the support and resistance levels. After this, buy or sell traders are place near support and resistance levels, and a downward or upward rally leads to making money.

Whether the market is range-bound or volatile, the price action trading strategy works in all market conditions. All time frame traders such as short-term, medium-term, and long-term traders can use this across all time frames. Due to the efficiency of price action trading, it is the widely preferred Forex trading strategy of seasoned traders.

Range Trading

Support and resistance levels will be identify and traders are place around these key levels in the range trading Forex strategy. Range trading is dependent on technical analysis. Simply, the support level is a bottom level in which the prices will stop falling further and reverses their movement. While the resistance level is the top level around which the prices will stop rising further and reverses the movement.

Position Trading

Position trading is the best long-term Forex trading strategy, it involves taking long-term positions to increase your profits from major shifts in the currency rates. But this strategy is not for short-term profit hunters, as it requires great patience and discipline to maintain the same position for weeks.

A large capital base is required for position trading, as the position wants to be maintained for months. Simply, low leverage and lot size are recommended while position trading. You need a better knowledge of technical and fundamental analysis to make a successful position trading strategy. This strategy is naturally long-term, but your stress level is limited, as daily price movements are futile to you.

Trend Trading

One of the most successful Forex trading strategies is trend trading. The first thing to do is to identify a trend. Here, trend refers to price action, that is, it continuously goes up or continuously comes down. An uptrend refers to the consistent upward movement of exchange rates. Whereas a downtrend refers to the consistent downward movement of exchange rates.

While in trend trading, the trader will find whether there is an upward or downward trend and then chooses an entry point to increase profits. Inflation, interest rates, and government policies largely affect the trend trading.

Range Trading

As the name suggests, range trading includes trading in ranges. The traders should find strong support and resistance levels and then trade between those two ranges. For range trading, currencies that are stable and less volatile to sudden news will be a perfect one.

Day Trading and Swing Trading

We also call day trading as intraday trading, in which the positions will be closed on a single day. The traders can last for a few hours, but have to end on the same day. A day trading strategy does not care for the fundamentals of the economy. This is employed to speculate whether the exchange rate will go up or go down and place your trade accordingly.

Simply in swing trading, traders speculate Forex trading strategy where you pick ‘top’ and ‘bottom.’ And enter into long or short positions. This swing trading strategy is a medium-term strategy where you will hold from a few hours to a few days. Then, it requires strong technical analysis skills like discovering support and resistance levels, moving averages, and candlestick patterns.

Carry Trade Strategy

Carry trade is a famous Forex trading strategy that follows the ‘buy low, sell high’ principle. A currency is known as funding currency if it has a low-interest rate, while a currency with a high-interest rate is known as asset currency. In Carry trade, investors buy the funding currency and take short positions in the asset currency. Traders can implement carry trades when the central banks are thinking of increasing their interest rates. But for the Carry trade strategy to work, there should not be any movement in the currency exchange rates.  

Scalping Strategy

This scalping is a strategy like the get-rich-quick type of Forex trading strategy. In scalping, you will buy or sell the currencies within minutes to claim the advantage of even the smallest price movement. So, the Scalpers last anywhere between 30 seconds to 1 minute. You should strictly follow your trading schemes throughout the trading session, as each trading session present multiple profit opportunities to become a successful scalper.

Bottom Line

Above in this blog, we have seen the top most profitable strategies for consistent profits, selecting the best and most profitable Forex trading strategy needs some practice and patience. While trading, you should remember your time horizon, risk appetite, and risk-reward ratio. It is also important to analyze that your trading style matches your trading strategy. For an instance, if you are a long-term trader, then position trading will suit you more than day trading or scalping.

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