Forex trading strategies describe how you enter and exit transactions using technical indicators to identify critical price levels. While there are hundreds of techniques to choose from, we’ve produced a list of the most popular forex trading strategies.

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Forex Trading Strategies- Best Guide 2022
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Forex trading strategies describe how you enter and exit transactions using technical
indicators to identify critical price levels. While there are hundreds of techniques to
choose from, we’ve produced a list of the most popular forex trading strategies.
To get there, you must first choose the greatest forex trading strategies that will benefit
you over time. Although not all expert forex trading methods will work in every case, it is
better to know when to utilize them.
Forex traders and market analysts are always coming up with new tactics to determine the
ideal time and point to enter or leave a trade.
To develop forex trading strategies that work for you, you must consider several elements.
There are many tactics to choose from, but comprehension and familiarity with the plan
are critical. In addition, every trader has different aims and resources, which must be
considered while selecting the best approach.
What are Forex Trading Strategies?
Forex trading strategies are trading techniques that help forex traders decide whether to
sell or purchase a currency pair. In addition, they make trading a little easier by providing
a defined structure for how a trader should invest his money.

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Good forex trading strategies aid traders in analyzing and comprehending the market so
that they may confidently execute trades with superior risk management techniques.
Choose forex trading strategies that correspond to your demands and objectives. Time
period, trading possibilities, and position size are some factors to consider.
Traders can compare the suitability of different forex trading strategies using these three
criteria:
Time is an important resource.
Trading chances are available regularly.
Typical goal distance
Benefits of Using Forex Trading Strategies?
Having successful forex trading strategies will help you achieve a lot in the forex market.
The truth is that forex traders use a variety of trading strategies, but they always assist
traders in attaining the following goals:
Profitable Forex Trading.
Forex Strategies are Trustable for good returns.
Forex Trading Efforts are Reduced
It gives you peace of mind and confidence when you are trading.
Top Forex Trading Strategies
This article will explain what forex trading strategies are and why they are beneficial to
adopt as we are going to explain the most often utilized currency pair Forex trading
strategies in this article:
Bollinger Band Trading Strategy
The Bollinger band approach is used to identify potential support and resistance levels in
the market. The Bollinger tool comprises three bands: the centerline represents a 20-day
simple moving average (SMA), while the upper and lower lines represent market
volatility.
The bands will spread if the forex market is highly volatile, and they will draw closer
together if the market is more constant. When the market hits Bollinger’s outer bands, it
frequently works as a catalyst for the market to revert to the core 20-period moving
average.
Trading Length
Forex traders can spot potential support and resistance points when the price swings
outside of the Bollinger band. When this happens, the market will either break out of its
range, or the move will be transitory, with the price eventually returning to its previous
direction.

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The bands aid forex traders in determining entry and exit positions for transactions and
serving as a guide for putting stops and limits in place.
Price Action Trading Strategy
Historical prices are studied to develop technical trading strategies in price action. It can
be used voluntarily or in combination with an indication. Although fundamentals are
rarely used, economic developments are hardly unheard of as a substantiating factor.
Trading Length
Price action trading can be used over various time frames, i.e., long, medium, and short-
term. Many traders prefer a price action trading strategy because it allows them to analyze
multiple time frames.
Range Trading Strategy
Range trading identifies support and resistance points and places trades around crucial
levels. This method works effectively in markets with little volatility and no obvious trend.
Technical analysis is the most important thing in this Strategy.
Trading Length
Range-bound forex trading strategies can work for every type of time frame ( short,
medium, and long term); that is why planning is not needed for time criteria. However,
because breakouts can occur, risk management is an important aspect of this Strategy.
Range trader would close all current range-bound trades.
Advantages
There are a lot of trading opportunities.
The risk-to-reward ratio is favorable.
Disadvantages
It needs a significant amount of time commitment.
It necessitates a deep understanding of technical analysis.
Trends Trading Strategy
Many traders of all experience levels utilize a trend trading strategy as a prioritized forex
trading strategy. It aims to earn money by taking advantage of a market’s directional
momentum.
In this Strategy, exit points are generated based on a positive risk-reward ratio and are
commonly marked by an oscillator (RSI, CCI, etc.). Traders can use stop-level distances to
either equal or exceed that distance in order to preserve a favorable risk-reward ratio.
Trading Length

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Trend trading strategy usually takes place over a medium to long time horizon. Multiple
time frame analysis because trends change in length like price action can be used in trend
trading.
Advantages
A lot of trading Chances.
Favorable Risk-Reward Ratio.
Disadvantages
Time taking Strategy
Technical analysis management.
Positioning Trading Strategy
Position trading strategy is a long-term strategy that focuses on fundamental
considerations. However, technical tools such as Elliot Waves Theory are also considered
in it. Less significant market swings are ignored in position trading strategy since they
impact the overall market picture. This method can be used on any market, including
stocks and currency.
Position trading strategy key levels on longer time frame charts, i.e., weekly/monthly,
hold useful information for position traders because of the entire view of the market. In
addition, technical analysis can determine entry and exit positions like the other
methodologies.
Trading Length
Position trading strategy has a long-term outlook upto weeks, months, or even years. It is
designated for the more patient trader, forecasting trade ideas, knowing how economic
issues affect markets or having extensive technical predispositions.
Advantages
Requires less time for trading.
The risk-Reward ratio is highly positive.
Disadvantages
Very few Trading Opportunities.
It necessitates a deep understanding of technical and fundamental analysis.
Day Trading Strategy
Trading instruments on the same trading day are known as the day trading strategy. That
is before the market closes, all positions are closed. This can be a single trade or a series of
trades throughout the day.
Trading Length
As long as the trade is opened and concluded during the trading day, trade periods can
range from very short (a matter of minutes) to very short hours.

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Advantages.
Sufficient required Trading Chances.
The Risk-Reward Ratio is the median that is bearable.
Disadvantages
Technical Analysis appreciable.
Forex Scalping Trading Strategy
Scalping is a phrase used in the forex market to describe the practice of making modest
profits regularly. This is accomplished by repeatedly opening and closing positions
throughout the day. This can be done manually or with the help of an algorithm that
follows specified standards for entering and exiting locations. The most liquid forex pairs
are selected since spreads are often tighter, which fits the Strategy’s short-term nature.
The scalping strategy is the practice of profiting from minor intraday price fluctuations.
Scalpers set a 5 to 20 pip objective for each transaction. Despite the low profits, it is one of
many traders’ most effective forex trading methods.
Trading Length
Scalping is a type of trading that involves making short-term trades with a low-profit
margin, usually on lower time frames upto 30 minutes to 1 hour.
Advantages
Several Trading Opportunities.
The success rate is improving day by day.
Exposure to a small amount of systemic risk.
Disadvantages
Consistency needed.
Slippage is a problem for you if you’re sensitive to it.
Swing Trading Strategy
Swing trading is a speculative approach in which traders attempt to profit from both
range-bound and surging markets. Traders can enter long and short bets by identifying
‘tops’ and ‘bottoms.’
This is another great forex strategy that involves trading in the medium term. It is a
strategy in which you hold a position for several days and benefit from the swing highs
and lows.
Trading Length
Swing trades are classified as medium-term since positions are often held for a few hours
to several days. However, longer-term trends are preferred because traders can profit
from the trend at various stages during trading.

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Advantages
It is possible to achieve extraordinary profits.
It is not necessary to enter and exit the market precisely.
Disadvantages
Cost of additional rollover
Opportunity cost is influenced by account liquidity.
Momentum Indicator Trading Strategy
The momentum indicator strategy uses the most current closing price compared to the
previous closing price. It’s then shown as a single line beneath the main price chart on a
separate line.
The indicator oscillates around a 100-point centerline. The distance between the indicator
line and 100 indicates how quickly the price is moving. For example, A number of 102
indicates that the market is moving faster higher than a reading of 101, while a reading of
98 indicates that the market is going faster downward than a reading of 99.
Trading Length
When it comes to detecting overbought and oversold conditions, momentum indicators
can be quite beneficial. Forex traders can use it to determine the strength of the market
movement and whether the price is trending up or down.
It’s critical to check that the market has previously respected the momentum signal and to
identify the exact conditions that appear to be operating.
Advantages
The importance of short-term volatility is negligible.
Momentum indicators are quite beneficial.
Disadvantages
Risk containing
RSI Indicator Trading Strategy
RSI stands for relative strength index. It is a well-known technical analysis indicator
employed in many forex trading strategies. Traders can use the RSI to spot market
momentum and overbought or oversold conditions.
The RSI indicator is plotted separately from the asset price chart on a separate chart. It
comprises a single line and two automatically set levels.
Trading Length
This forex trading strategy would be centered on profiting from market retracements
between these price levels. Sharp price changes can cause the RSI to offer false signals, so
it’s crucial to use it as part of a larger strategy to confirm entry and exit positions.

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Advantages
Retracements in the market between different price levels.
Indication of Technical Analysis.
Helps in executing other forex trading strategies.
Disadvantages
RSI gives false signals with sharp price Changes.
Breakout Trading Strategy
Breakout trading strategy entails entering a trade as soon as feasible within a trend. For
example, when the market price ‘breaks out of a consolidation or trading range – often
when a support or resistance level is met and surpassed – this is known as a breakout.
Trading breakouts is a crucial strategy, particularly in forex, because the move signals the
beginning of a tumultuous phase. Forex investors can enter the market just as the price
makes a breakout and ride it until the volatility calms down again by waiting for a critical
level to breach.
Trading Length
The ability to notice the volume of trades taking place on the market is required to use a
breakout trading technique. However, because the FX market is decentralized, there is no
means of knowing the number of deals made. This necessitates the implementation of an
effective risk management strategy.
Advantages
A high volume of trading opportunities.
Trading ranges combine with breakouts.
Disadvantages
Volatility affects it.
Because of the slow market, the positive risk is minimal.
Conclusion
Forex trading strategies are the methods for assisting forex traders in determining when
to buy or sell a currency pair in order to maximize possible profit while minimizing risk.
Market analysis, risk management approaches, and clear trading determinants are all
included in the finest forex trading methods. Many brokers like ABInvesting use the
best forex trading strategies for their traders as investors can trust and get good profitable
returns with the help of these forex trading strategies.