Forex, a term that stands for the foreign exchange of currencies, is a market of 7 trillion dollars and counting. The basics are simple – it is all about creating a financial advantage by converting one currency into another. Many banks conduct forex trading on behalf of their clients, but it’s obvious that the market is full of lucrative speculative opportunities for individual investors as well.  

This is why many people want to start with currency trading, but, like every business, this one also has its risks. So if you’re looking for the most secure way to start your Forex venture, we’ve prepared a list of beginner strategies that will reduce your risk to a minimum.

Accurate Price Movement Information

There are many Forex chart types, but candlestick charts are most commonly used by traders since they offer accurate price movement information. Other types of charts such as bar or line charts won’t reveal much regarding past price action, so a candlestick strategy is the best indicator when it comes to trading entries and exits possibilities.

This trading strategy is based on technical analysis that uses past price reactions to help you decide on future price action. It is plainly visual and extremely easy to understand. Each candlestick represents the price action for a time period from one minute to a month, so it doesn’t require a lot of attention to follow.

Predicting Future Price Directions

All trading is based on predictions, but one of the easiest ways to predict future price directions is to build your strategy around support and resistance levels shown on the charts. These work like barriers for any currency pairs you’re trading, preventing the price to move beyond that level. They are equally efficient in all time frames and you can spot them easily on the charts.

Since these levels indicate an appropriate entry point, they’ll also highlight where you shouldn’t enter the trade. Basically, they create a price chart map to show you any potential price reversal points. To make this strategy work, you need to take sell entries only after the price rejected the resistance area and buy entries only after the price rejected the support area. It requires a full understanding of the market context, but Forex is a global phenomenon and guidelines are available in any language, so even people living in smaller countries like Monserrat can get to know the in’s and out’s simply by visiting topratedforexbrokers.com/ms/.

Paying Attention to Trends

As history has shown us, all markets move in trends so by identifying trending Forex pairs you can determine the direction you should be looking for a trade. There are many trending indicators available in the MT4 and MT5 charts so it’s easy to find one suitable for you and later you can make your own as well. The level in these indicators will show the strength of the movement of any currency pair in the form of the Relative Strenght Index (RSI). The RSI bellow 30 shows potential buying possibilities while the RSI above 70 presents potential selling possibilities.

Following the Sequence

While trends are enough to make a strategy, you can go a step further by combining them with the Fibonacci retracement levels based on the famous mathematical sequence of numbers. This creates an equally successful trading strategy based on following repetitive support and resistance levels. It’s obvious that this strategy will require more time to complete the trade since it requires a lot of practice to get the hang of the patterns, so it is a medium to long term undertaking. But, when you do get a hang of it, it is all about buying at uptrend and selling at a downtrend.

Quantity Over Size

We finish our list with a so-called scalping strategy where you buy or sell currency pairs in very short periods, from a few seconds to a few hours. It is a practical approach aimed at the high quantity of smaller accumulated profits. Beginner traders love this one since it is very low-risk, but you must have a firm exit strategy since large losses can eliminate a lot of small gains.

The fact that you’re sacrificing the size of the profits doesn’t mean you can’t make attractive gains out of it but controlling this strategy takes a lot of determination and practice. It can be highly effective, but it does require great concentration and a great deal of patience.

Each of these strategies is good to start your Forex trading with, but keep in mind that their accuracy depends on your execution and implementation. There are multiple factors to consider, such as your goals, resources, and the amount of time at your disposal. For example, scalping is not suitable for part-time dedication since it requires a lot of attention while using candlestick on a daily frame doesn’t require much time. Keep all this in mind and don’t forget that all trading involves trial and error so it’s okay to try out more of them before you find a suitable one.