Best Forex Trading Strategies 2023 – Beginner’s Guide
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If you’re thinking about buying and selling currencies online – you’ll need to have a few forex trading strategies under your belt. Not only will this ensure that you protect your bankroll – but you’ll have a much better chance of making consistent, risk-averse profits.
In this guide, we discuss the best forex trading strategies for beginners.
In This Guide
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Mobile App
Regulation
FCA CYSEC ASIC
Min.Deposit
Leverage max
Forex pairs
Fees & spreads
Additional Fee
Continuous Fee
Conversion Fee
50 pipspips
Trading platforms
Copytrading
Ava Options
Cryptocurrencies
Raw Materials
Additional characteristics
Islamic Account
Education & Webinars
Charts & Tools
Spread Betting
Automated Trading
Free Forex Signals
Payment methods
Bank Transfer
Credit Card
Sepa Transfer
Best Forex Trading Strategies 2023 List
The best forex trading strategies ensure that you find the perfect balance between risk management and upside potential. The strategies that we are going to discuss in this guide can be used by forex traders and scalpers of all shapes and sizes – especially those with little to no experience of the currency scene.
- Master the Basics and Trade With eToro
- Practice on a Day Trading Simulator With Libertex
- Create a Bankroll Management Plan
- Become a Swing Trader
- Consider Automated Forex Trading
- Take a Forex Trading Course to Learn Technical Analysis
- Make Sure You’re Using a Low-Cost Platform
Your capital is at risk.
67% of retail investor accounts lose money when trading CFDs with this provider.
Forex Trading Strategy 1: Master the Basics
The best forex trading strategy for those that are just starting out in the world of currency speculation, is to ensure you have a firm grasp of the basics. If you don’t, you are certain to walk away from your forex endeavors at a financial loss.
Although there is much to learn about online forex trading – we would argue that there are three core pillars to understand fully. This includes pairs, pips, and orders.
Forex Pairs
Forex markets are traded in pairs – which will contain two competing currencies. The specific currencies within each pair will determine the market category – which includes majors, minors, and exotics.
- The best forex trading strategies you come across should tell you to focus on major pairs.
- These are pairs that contain the US dollar and another strong currency – such as the Japanese yen or Euro.
- Crucially, these pairs are the most traded in the forex scene, and thus – they possess the most liquidity, tightest spreads, and lowest levels of volatility.
Alternatively, you also have minor pairs – which contain two strong currencies but never the US dollars. Examples include EUR/GBP and NZD/AUD.
The final pair category – which is best avoided as a beginner, is exotics. These pairs will contain a currency from a non-major economic region – such as South Africa, Peru, Kenya, and Turkey. Naturally, the spreads and volatility levels on exotic pairs can be huge – so stick with majors.
Forex Pips
Understanding how percentage in points work – or PIPs, is also a crucial strategy. In a nutshell, when the exchange rate of a currency pairs suffer fluctuations (the market moves up and down) – this is calculated in pips. Other than pairs containing the Japanese yen, most user-friendly forex trading platforms will display five digitals after the decimal.
- For example, if you’re trading GBP/USD – the exchange rate might look like this: 1.38609
- If the above pair increase to 1.38619 – that’s would be a price action trading movement of 10 pips
The number of pips that the pair moves by will ultimately determine how much you make or lose. As such, it’s really important that know how forex pips work before risking any money.
Forex Orders
When buying and selling currencies via a day trading platform – you’ll need to let your broker know what position you wish to take.
- If you think that that USD/CAD will rise – you need to place a buy order
- If you think that USD/CAD will fall – you need to place a sell order
In addition to a buy/sell position – you can also place risk-management orders. This ensures that you have a clear entry and exit strategy on your forex trade.
- Let’s say that USD/CAD is priced at 1.22824
- You want to enter the market when the pair breaks 1.22900
- As such, you can specify this exact price via a limit order
- Once the trade is live – you might want to cap your potential losses by 1%. You can do this via a stop-loss order – meaning the broker will close your position if it goes down by 1%
- You can also set up a take-profit order to lock in your gains. For example, you might enter this at 4% – meaning the broker will close the position if it increases in value by 4%.
Ultimately, ensuring that you understand the ins and outs of limit, stop-loss, and take-profit orders is one of the best forex trading strategies that you can learn as a beginner.
Forex Trading Strategy 2: Practice on a Day Trading Simulator
Once you have done your homework on forex pairs, pips, and order types – it’s then time to start trading. However, we would strongly suggest that you start off with a day trading simulator. These are essentially demo accounts offered by online brokers and they allow you to trade in live currency market conditions without risking any money.
We would suggest considering eToro for this – as the regulated broker offers the following:
- Free day trading simulator without you needing to make a deposit
- Demo trading account mirrors actual market conditions
- 49 forex pairs supported
- Tight spreads and 0% commission
- The simulator is pre-loaded with $100,000 in paper trading funds
- You can use the demo facility for as long as you wish
Ultimately, eToro allows you to practice the best forex trading strategies in a 100% risk-free ecosystem – and it takes just minutes to get the demo account set up!
Forex Trading Strategy 3: Create a Bankroll Management Plan
Once you have spent a reasonable amount of time practicing on a forex demo account and you feel ready to start trading with real money – make sure you create a bankroll management plan.
In its most basic form, this will ensure that you never risk more than a certain amount on each trade. This should be stipulated in percentage terms and multiplied by your current brokerage account balance.
- Let’s say that you want to create a bankroll management plan that limits your forex trades to 1% of your balance
- You start off with a balance of $2,000
- This means that your first trade cannot exceed $20
- A few days later, your balance stands at $2,300 – so your maximum stake is now $23
- In 6 months time – you have built your balance to $5,000 – so that’s a maximum stake of $50
It is important to note that a bankroll management plan not only increases your stake. On the contrary, if you are going through an extended losing period of time – your maximum stake size will go down.
Your capital is at risk.
67% of retail investor accounts lose money when trading CFDs with this provider.
For example, if you started with $2,000 but your balance now stands at $1,500 – your maximum stake has been reduced to $15 from $20. Crucially, this ensures that you never burn your account balance in its entirety – which is why bankroll management is one of the best forex trading strategies for beginners.
Forex Trading Strategy 4: Become a Swing Trader
You might be under the impression that most currency speculators are day traders – meaning that they open and close positions within a few hours or even minutes. However, some of the most successful currency traders actually prefer to take a swing trading strategy.
The overarching reason for this is that you are not pressured into closing a position before the end of the day. On the contrary, forex swing trading offers much more flexibility – so you can keep positions open for hours, days, or even weeks.
This is much more conducive for beginners – as you can take your time researching the markets and thus – you can avoid having to make quick and instant decisions. In terms of forex swing trading strategies, a good starting point is to focus exclusively on financial news.
This means that you don’t need to understand how to read and analyze pricing charts or charts patterns. Instead, you will be entering and exiting trades based on real-world events. To do this, you’ll need to look out for crucial developments like interest rate changes, economic data (e.g. GDP levels), geopolitical events, and more.
Your capital is at risk.
67% of retail investor accounts lose money when trading CFDs with this provider.
Another idea that you might consider in your search for the best forex swing trading strategies is to identity a prolonged trending. For example, in the image above – you can see that NZD/USD has been on an extended upward trajectory for many, many months.
A swing trader would look to capitalize on this by keeping a buy order open on NZD/USD for as long as the trend remains in play.
Forex Trading Strategy 5: Consider Automated Forex Trading
The best forex trading strategy for those without any knowledge of technical or fundamental analysis is to consider an automated system. By this, we mean trading in a fully autonomous manner – relying on a piece of pre-programmed software of a Copy Trading platform.
Regarding the software option, this will come in the form of a forex EA (expert advisor) – which is essentially a trading robot. You will purchase the robot from a third party, and then install it into MT4. Once activated, the robot or forex EA will start trading on your behalf.
However, this form of automated trading is fraught with risk, as you never know what you are getting with a robot. For example, the robot provider might claim that the underlying software is able to outperform the market consistently. But, in reality, it could end up blowing through your account balance on the first day.
Instead, Copy Trading via a regulated online broker is a much better option. For example, at eToro, you can copy a seasoned trader like-for-like and know that the data in front of you is 100% valid. In other words, you can view stats surrounding the trader’s historical performance, preferred forex pairs, average trade duration, and risk level.
Ultimately, once you select a top-rated Copy Trading pro – you can sit back and invest in a passive nature. This means that you won’t need to spend countless hours researching the forex markets yourself.
Forex Trading Strategy 6: Take a Forex Trading Course to Learn Technical Analysis
At some point in your currency trading career, you will need to understand the art of technical analysis. After all, the best forex trading strategy employed by seasoned investors is to read and interpret pricing charts. The only way to do this is to learn about the many different technical indicators in the market.
These indicators will look to analyze the historical pricing data of a forex pair and will look for a specific trend. For example, the technical indicator will look to evaluate whether a forex pair is overbought or oversold, or perhaps whether a particular support or resistance level is about to broken.
Your capital is at risk.
67% of retail investor accounts lose money when trading CFDs with this provider.
Either way, there are dozens of technical indicators that are popular with seasoned forex traders – so consider taking a course so you can incorporate this into your short-term trading strategy. Once you know your way around a pricing chart, you’ll be able to deploy some of the best forex day trading strategies utilized in the currency scene.
In other words, you’ll be able to actively enter and exit positions throughout the day – as opposed to taking a more passive approach via swing trading. Don’t forget – you can always revert back to your eToro demo account when practicing a new day trading strategy – meaning you won’t be risking any capital.
Note: Some of the best indicators to start with include the moving average, support and resistance levels, trend trading lines, and downtrend and uptrend price movements.
Forex Trading Strategy 7: Make Sure You’re Using a Low-Cost Platform
Often overlooked by newbies, one of the best forex trading strategies is to ensure your chosen broker offers super-low fees. After all, if your broker charges high commissions or wide spreads – many of the best forex day trading strategies discussed today will not be possible. Instead, you’ll find that your risk-averse profit margins get eaten away at by expensive trading fees.
The two main fees that you need to look out for when choosing a forex broker is the spread and commission.
Spreads
The spread is simply the difference between the buy and sell price of a forex pair. We explained how pips worked earlier – so should be able to calculate the spread with ease.
- Let’s suppose that you are trading EUR/USD
- Your broker is quoting a buy price of 1.19996
- The sell price is being quoted at 1.19994
- The difference between these two prices is 2 pips
- As such, the spread on EUR/USD in this example is 2 pips
The number of pips that the spread is quoting will tell you how much you need to make in a position to cover your costs. In this example, this means that your position needs to grow by 2 pips just to break even. If it increases by 3 pips, your net profit is 1 pip when factoring in the spread.
Commission
In addition to tight spreads your chosen forex broker should also offer low commissions. In fact, the best forex brokers in the online space will charge you no commissions at all. This includes the likes of eToro and AvaTrade, which we discuss in more detail shortly.
In other cases, your chosen broker might charge commission in percentage terms. For example, if you are being quoted 0.2% and you stake $2,000 – you will pay a commission of $4 to enter the market. When you close the trade, you will again pay a commission of 0.2%.
Best Forex Trading Platforms 2023 Revealed!
The section above explained that one of the best forex trading strategies for beginners is to choose a low spread and zero commission broker. However, when choosing a broker, you need to look at a variety of other factors.
For example, is the broker regulated, does it offer transparent trading conditions, and what currency pairs are supported. Additionally, don’t forget to look at accepted payment methods and minimum account balances.
To ensure you are able to deploy the best forex trading strategies in the most effective way possible – below you will find a small selection of brokers that are worth considering.
1. eToro – Overall Best Forex Trading Platform 2022
If you’re looking to start deploying the best forex trading strategies discussed today – eToro is a great shout. This regulated forex broker offers dozens of major, minor, and exotic pairs – all of which come with tight spreads. You won’t pay any commissions at eToro – making it perfect for both day and forex swing trading strategies alike.
Before you start trading with real money, you might consider the demo account offered by eToro. As noted earlier, you can access this as soon as you register, there is no requirement to make a deposit, and your demo account comes with $100k in paper funds. When you get around to trading forex with real capital, you can fund your account with a debit/credit card, e-wallet, or bank wire.
eToro also offers the Copy Trading tool that we discussed earlier. This means that you can trade forex passively – as your chosen currency trader will buy and sell on your behalf. This tool comes fee-free, albeit, the minimum is $500 per copy trader. eToro is really simple to use, too – making it perfect for newbies. In terms of safety, eToro is regulated by the FCA, ASIC, and CySEC.
Pros:
- Super user-friendly trading platform with 20 million+ clients
- Buy stocks without paying any commission or share dealing charges
- 2,400+ shares and 250+ ETFs listed on 17 international stock markets
- Trade cryptocurrencies, commodities, and forex
- Deposit funds with a debit/credit card, e-wallet, or bank account
- Ability to copy the trades of other stock trading pros
- Regulated by the FCA, CySEC, ASIC and registered with FINRA
The Best Forex Trading Strategy Ever
I have listed down the top forex trading strategies of all time based on parameters like- Return on investment (ROI), win to lose ratio, draw downs, and risk to reward ratio. Here, I’ve brought the opportunity for you to learn about the top 30 forex trading strategies of all time. You can try each of them and find which works best for you. They are all free and works as good as the paid system that you can find anywhere else over the internet.
So, let’s explore!
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CAP Channel Indicator is an exceptionally effective trend based indicator. It is based on the concept that market prices will fluctuate inside a channel. It is very much famous for its simplicity of use. You can also add other suitable trading tools, indicators or oscillators along with CAP Channel Indicator to transform it into a perfect Forex trading strategy. Using this indicator you’ll not only be able to spot a market entry but also you’ll get a guideline throughout the exit point of your trade. CAP Channel Indicator is suitable for any currency pair and also applicable on any timeframe chart. Thus, it became useful for scalpers, day traders and even long-term market participants.
2. Forex Stochastic Maestro 5 Strategy
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Forex Stochastic Maestro 5 Strategy is a strong trend following trading strategy. We call it strong because it uses Heiken Ashi, Signal Line, Moving Averadsgoogleage and Stochastic Oscillator all together to make sure a perfect detection of the market trend.
This strategy works fine with any currency pair and best to use from M15 to any longer period timeframe chart. All though it is a set of 4 different indicators it expresses its signal in a very simple manner so that even a newbie trader can use and be benefited from this tremendous trading strategy.
Forex Stochastic Maestro 5 Strategy can be your reliable partner in your daily trading life but you must study it well and master the strategy before you land it for real account trading.
3. Forex Profit Heaper Strategy
Forex Profit Heaper Strategy is a trend based trading strategy. It has been developed to serve a complete trend and trade-related guidelines to its users. It uses FPH Bars, FPH Histo Bars, FPH Filter, FPH Line and FPH Oscillators all together to generate the finest trading signals.
As it is a trend based strategy, it signals at the right starting point of a trend and also defines the end of a momentum in advance. So, a correct application of Forex Profit Heaper Strategy will allow you to catch the momentum from a perfect position and exit entries when the right time comes.
Forex Profit Heaper Strategy is suitable for all currency pairs and you’ll be able to use it for any timeframe chart. We recommend you to learn well about the indicators used in this strategy and follow the rules correctly for a much better trading result.
4. Forex Radar Signal Trading Strategy
Radar Signal Trading Strategy is a swing trading strategy that has been widely accepted by swing traders around the Forex world for its reliability and exceptionally steady performance. As a swing trading strategy, it enables you to buy low and sell high which enlarges your profit range and minimizes risk factors. This strategy is so versatile that it fits with any currency pair and works perfectly on any of the M15 to Daily timeframe charts.
Radar Signal Trading Strategy uses some powerful tools like Radar Signals, Stoch Histogram and Daily open to determine and signal the exact swinging level. You’ll find them more interesting and useful after you learn and master well this amazing swing based strategy.
5. Forex Bandit Flash Forex Trading Strategy
Forex Bandit Flash Forex Trading Strategy is a completely trend-based trading strategy. Trend following traders have found this strategy so useful that they have rated it 9.7 out of 10 for its sensible application and splendid performance. It uses Snake & T3 dean, Trend Session, and Heiken Ashi to detect the trend correctly in time. It also signals the strength of present trend which is interpreted as a continuation of trend signal. This information helps you to define your trend based entry and determines the holding period of the trade as well.
Forex Bandit Flash Forex Trading Strategy can be applied on any timeframe chart in between M5 to H4. Thus, works best for scalpers to intraday traders. It also fits with all the Forex currency pairs.
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