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Popular Forex Strategies Used by Experienced Traders.

There are multiple reasons why the forex market may be an attractive option to investors, even for beginner traders who have little to no experience. The forex market is highly accessible, requires only a small deposit of funds in order to make a start, and is available for trade 24 hours a day and 5 days a week. 

Trading the foreign exchange market without a strategy is tantamount to going out on a trip without a map because you never know where your account will end up. While the forex market may be complex, it can be successfully navigated through due diligence, self-education, and taking it step by step.  

If you want to trade Forex successfully you have to put together some factors to formulate a trading pattern or strategy that works for you. There are several strategies that you can follow. However, it is imperative to understand and be comfortable with the strategy you are adopting. Every forex trader has unique resources and goals, and these must be taken into consideration when choosing a suitable strategy. There are three criteria forex traders can use to compare the various strategies on their suitability, they include; Frequency of trading opportunities, time resource required, and typical distance to the target. With regards to your time resource, the strategy that’s demanding the most is scalp trading due to the high frequency of trades being entered regularly.

How to choose a Forex strategy?

One of the most important decisions that can help assure your profitability as a forex trader is choosing a forex strategy. Hence, you will want to choose a winning strategy that best suits your personality and lifestyle. 

When you decide on one or more strategies, you can then check out how they perform. This can be done by testing the strategies through backtesting, on MetaTrader forex platforms. It’s important that you vet your preferred strategy in the demo account provided by FXCentrum which will allow you to open without risk.

 If any of the strategies still look profitable, you can begin trading them in your live account for the ultimate test. It’s recommended that you start with smaller trades and then work your way up to larger trades as you begin to gain confidence in the strategy’s performance and your ability to apply it in a disciplined way when trading a live account.

Factors to take into consideration before choosing a Forex trading strategy.

Before you proceed in choosing a trading strategy, there are three major factors or elements that you should take into consideration in this process.

It’s very important to choose a time frame that suits your trading style. In forex trading or a trader, there’s a significant difference between trading on a 15-min chart, a 4-hour chart, and a weekly chart. If your trading tactics are leaning more towards that of a scalper then you should focus on the lower time frames e.g. from 1-min to 15-min charts. 

Identifying the proper lot trade size is of the utmost importance in forex trading as it is a key risk management plan. Successful strategies often require you to know your risk sentiment. 

Never attempt to risk more than you since it leads to bigger losses. Therefore, always set a risk limit at each trade. For example, traders tend to set a 1% limit on their position,  this means that they won’t risk more than 1% of their investment on a single trade.




A high number of positions might favor those that are implementing the scalping trading strategy. However, traders who spend more time on fundamental factors and analyzing macroeconomic reports would have lesser time in front of charts., hence they should look into a few bigger positions and higher time frames

There are four major trading sessions in the forex market. They include the Sydney session, the Tokyo session, the London session, and the New York session. 

However, Traders often focus on one of the three trading periods; this is known as the forex 3-session system. So, assuming you work nine to five in Nigeria, you could trade forex before or after work. These three sessions consist of the North American, Asian, and European sessions and are popularly called New York, Tokyo, and London sessions. 

The best trading strategy to adopt in those time blocks is to select the most active currency pairs. Knowing when the major currency markets are open will assist you in selecting your major pairs

  • New York opens from 8:00 a.m. to 5:00 p.m. EST
  • Tokyo opens from 7:00 p.m. to 4:00 a.m. EST
  • London opens from 3:00 a.m. to 12:00 noon EST
  • Sydney opens from 5:00 p.m. to 2:00 a.m. EST




Traders must develop rules governing when they should enter a position in a currency pair.

In the same vein, forex traders must create rules governing when to exit a position, especially when to get out of a losing position.

Traders should have set rules governing how to buy and sell currency pairs.

Traders must decide what currency pairs they trade and become professionals at reading those currency pairs.

Click Here to Check out our article on
Currency Pairs Traded in Forex!

Best Forex trading strategies.

Many successful strategies for trading forex exist, but not all of them are suitable for every trader. Select a strategy that best suits your particular situation, including your available time, personality type and risk tolerance. These are covered below based on the typical time involved, ranging from short to long term.

1.

Scalping:

Scalping is a very short-term forex trading strategy that involves taking multiple small profits on trading positions within a short period. Forex scalpers require ultra-quick reaction times because they frequently enter and exit trades in just seconds or minutes. Scalping is considered to be a fast-paced and stressful activity that may not suit every trader.

Scalpers also strictly monitor price charts for patterns that can assist them to predict future exchange rate movements. They aim to use very short-term tick charts and generally do best using a forex broker with tight spreads.

A scalper is a trader that aims to benefit from shorter market moves. A swing trader, on the other hand, uses longer time frames such as a 4-hour chart and a daily chart to generate profitable forex trading opportunities. How long do you intend to stay in a trade? Make sure you answer the question before you pick your preferred trading strategy.

2.

Price action trading:

This is also a strategy for part-time traders that includes the study of historical prices to formulate technical trading strategies. It applies to those who pop in and out of work (around 10 minutes at a time). Price action can be adopted as a stand-alone technique or in conjunction with an indicator

Price action trading means analyzing the charts or technics of a selected currency pair to inform trades. In price action trading, forex traders can analyze up bars, particularly those that have a higher high or higher low than the previous bar, and look at down bars i.e. a bar with a lower high or lower low than the previous

Up bars, in forex signal an uptrend while down bars signal a downtrend. Other price action indicators may be inside or outside bars. The key to attaining success with this strategy is trading off of a selected chart timeframe that best meets your schedule.

Several additional strategies fall under the price action bracket as outlined above.

Length of trade: Price action trading in forex can be implemented over varying periods (long, medium, and short-term). The capacity to use multiple time frames for analysis makes this strategy valued by many traders.

Entry/Exit points: There are various methods to ascertain support/resistance levels that are used as entry/exit points, they include: Fibonacci retracement, using candle wicks, trend identification, Indicators, and Oscillators. Inside price action, there is a range, trend, scalping, day, swing, and position trading.

3.

Day trading:

This is another short-term trading strategy that is followed only during a particular trading session. Day traders generally do not take overnight positions, so they close out all trades each day. This helps reduce exposure to market movements when the trader is inattentive to the market. 

Most day traders use trading plans based on technical analysis on short-term charts that show intraday price action. Many day trading strategies exist, but a popular one is known as breakout trading. Trades get triggered when the exchange rate moves beyond a given level on the chart for a currency pair and are confirmed when accompanied by an increase in volume. 

The 30-minute candlestick chart of GBP/USD shows a breakout below the level of the lower of the 2 converging trend lines of a triangle pattern drawn in red. Note that trading volume also increased when the breakout occurred, thereby confirming it.

4.

News trading:

This strategy is used by forex traders with enough funds and a desire to take bigger risks; hence, it is not ideal for forex beginners. News trading can be based on technical and fundamental analysis and is generally influenced by the notable volatility often seen in the foreign exchange market immediately after key news is released. 

In addition, news forex traders need to observe economic calendars for key data releases and watch the market closely before the event to ascertain key support and resistance levels so that they can quickly maximize after the event based on the results. With a news trading strategy, you need to regularly maintain strict discipline when managing your currency positions during such fast markets and always place stop-loss and take profit orders in the market. 

A typical example of an economic calendar event that a news trader might utilize is U.S. unemployment claims. This particular data was volatile during the COVID-19 shutdown in the U.S. and influenced considerable fluctuations in the foreign exchange market after its release.

5.

Swing or momentum trading:

This strategy is sometimes known as momentum trading and it consists of a medium-term trading strategy that captures more market moves. Swing trading focuses on larger price movements than scalping or industry trading. This means traders can set up a trade and check in on it every few hours or days rather than having to constantly watch their platform. 

Swing forex traders implement this strategy by trading both with major trends and also against them when the market is correcting, so they should be willing to hold overnight positions. They aim at focusing on entering and existing trading positions based on momentum indicators that assist in providing buy and sell signals. Swing Traders use the indicators to find overbought or oversold markets that they can sell or buy.

Sometimes, they might buy ahead of support or sell before the resistance levels that appear on the charts of the exchange rate for a currency pair. Commonly used momentum indicators in trading include Moving Average Convergence Divergence (MACD) histogram and relative strength index (RSI). Below is a daily candlestick chart is shown for the USD/CHF currency pair displaying the MACD and RSI in indicator boxes.

6.

Trend trading:

This is a longer-term forex trading strategy that involves following the existing trend or directional movement in the market for a preferred currency pair. It often involves buying on pullbacks during uptrends or selling on rallies during downtrends. Trend traders often use trailing stop-loss orders to secure their profits if a significant reversal materializes. 

Most trend traders also use technical analysis indicators like the ADX (Average Directional Movement Indicator) and moving averages that smooth out the price action for better identification of trends. In addition to that, they also utilize longer and shorter-term moving averages and watch out for crossovers to signal a potential reversal. The candlestick chart below shows an upward trend after progressively making higher highs and higher-lows 

Other Forex Trading Strategies.

You can also utilize these additional strategies if you want to be a part-time forex trader:

Intraday trading: this is a more conservative approach to scalping with trades being focused on daily price trends. Trades may be open anyway between one to four days, but focus on the major sessions for each market

Forex hedging: Hedging with forex is a risk management technique in which a trader can offset potential losses by taking opposite positions in the market. It is used as short-term protection of one’s position in a currency pair from an adverse move.

Forex martingale strategy: For every losing trade, you double the investment made in future trades to attempt to recover your losses, as soon as you make a successful trade.

Forex grid strategy: Uses buy and stop orders and sell stop orders to profit on natural market movements.

Setting up Stop-Loss orders in Forex trading: This is another short-term trading strategy that involves implementing stop-loss orders to prevent the market from taking an adverse and drastic sudden move against your position, hence your money will be protected.

Set up trading orders: these include: setting buy or sell limit, sell stop, buy stop or other entry/exit orders that aim at ensuring you do not miss opportunities to enter or exit positions. Most forex trading platforms and brokers these orders with no additional fees.

Taking fewer positions and holding for days: as a forex trader, it is imperative that you know the drivers of your preferred currency pairs and have taken the time to understand your market. Hence, after you have studied the market and narrowed down your particular preferred currency pairs, choosing a few positions and holding them for a longer period is a wise strategy for part-time forex traders. Another prudent strategy is to put in stop-loss orders in all your trades to minimize any losses if the market moves adversely against you.