Hundreds of different trading strategies abound on the Forex market, but what are the best Forex trading strategies for beginners? This is a very common question among new traders, and with good reason.
It’s often said that a new trader is closer to becoming profitable on a consistent basis than a trader who has been losing money for years. This is due to the fact that a new trader hasn’t had time to develop any bad habits. A trader who has been struggling for years must not only figure out what works best for them, but also break any bad habits and put aside any negative feelings that have developed over time.
Regardless of whether you’re a novice trader or have been trading for years, there are a few price action trading strategies that you should always have on hand. I invite you to continue reading to learn three trading strategies that have become a part of my trading strategy.
1 Pin Bar Forex Trading Strategy
When it comes to beginner Forex trading, the pin bar reigns supreme. This is due to the fact that it is a very obvious pattern that is easy to spot on a chart. It’s also one of the more simple and direct trading strategies.
Recognize how the market found resistance during a rally but was prepared to achieve it quickly. Former resistance becomes new support, according to one of the basic principles of technical analysis. The market did indeed find support at previous resistance, forming a bullish pin bar in the process.
Take a look at the GBPCAD daily chart, where a bullish pin bar has formed.
After an extended move up, GBPCAD met resistance in the chart above. The market found new support after breaking through resistance, comprising two bullish pin bars. The market continued to rally for just another 370 pips shortly after forming these pin bars.
See the lesson on the Forex pin bar trading strategy for more information on this strategy.
2 Inside Bar Trading Strategy
The inside bar strategy is another highly effective Forex trading strategy for beginners. The inside bar, unlike the pin bar, is best traded as a continuation pattern. This means we’ll use a pending order to trade a breakout in the major trend’s direction.
An inside bar during a rally is viewed in the chart below.
Take note of how the bar preceding the inside bar is considerably larger. Because it completely engulfs the inside bar, this bar is known as the “mother bar.” After the consolidation period, which is represented by the inside bar, on a break of the mother bar’s range, the strategy’s true magic happens.
On the daily chart of the USDJPY, an inside bar formed during a strong rally.
On the chart above, notice how the USDJPY formed the inside bar after a very strong rally. These are the best inside bars to trade because they show a true consolidation period, which often leads to the major trend, which in this case is up, continuing.
See the inside bar trading strategy lesson for more information on this strategy.
3 Forex Breakout Strategy
Forex trading is not for the faint of heart. However, with the breakout strategy outlined below, you’ll be profiting in no time!
This strategy differs from the majority of the existing breakout strategies. Rather than trading the level’s actual break, we’ll wait for a pullback and retest before entering.
We’re also only interested in breakouts that occur from a wedge pattern rather than a horizontal level.
The Forex breakout strategy is displayed in this chart.
Take note of how the market has created a terminal wedge, which simply means that the pattern will come to an end at some point. When the market breaks to either side and then retests the level as new support or resistance, traders have an opportunity to trade this pattern. The entry would have happened on a retest of support-turned-resistance in the example above.
Let’s look at the same breakout strategy again, but this time on a USDJPY 4 hour chart.
Notice how, in the USDJPY 4 hour chart above, the market repeatedly touched the wedge’s upper and lower boundaries before breaking lower. We could have looked for an entry on a retest of former support as soon as the 4 hour bar closed below support, which came just a few hours later.
Although I prefer the pin bar trading strategy, I have had some of my most profitable trades using the Forex breakout strategy described above. After a breakout, the market will frequently react aggressively, allowing traders to make a large profit in a short period of time.
That’s all there is to it. For beginners, here are three simple Forex trading strategies. These are by far my favourite strategies, and for good reason. They can quickly grow your trading account into a sizable sum if used correctly. The best part is that they are extremely easy to understand and thus incorporate into your trading strategy.
- The following are some of the most important points from the lesson:
- The pin bar trading strategy works best when it’s used as a reversal pattern in the opposite direction of the main trend.
- The best way to trade the inside bar trading strategy is as a continuation pattern.
- After a break and retest of either support or resistance, the Forex breakout strategy should be traded.
- All you really need to become profitable trading Forex is two or three great trading strategies
What is Forex trading for beginners?
It’s helpful to keep things simple when you’re first starting out as a trader. Start focusing on just one or two strategies at a time. You can then spend the remainder of your time and energy to improving your patience and discipline.
What are the best Forex trading strategies for beginners?
The pin bar and inside bar are two of my favorite strategies for the beginner. The breakout strategy is another excellent choice.
What is your single best advice for Forex beginners?
Slow down and don’t worry about making money. Stay patient while you work on developing a solid process. If you do that, the money will come.