Have you been thinking about entering the Forex trading game? Are you intrigued by the potential return this investment method could bring? While the profit sounds nice, keep in mind forex trading requires a lot of research and education. There are various forex strategies and trading styles out there and you need to find what works for yourself.
A Look at the 2021 Forex Market
The market has changed significantly after a year of struggling with the pandemic. For one, interest rates are at a historic low with all central banks bottomed out at some point in 2020. So, what should you expect in the forex market this year? To name a few:
- Volatilities are surging again after the sharp dip caused by the pandemic
- Public debt pressure will play a huge part in policy formulation
- USD may show a sharp decline due to continued pressure
- AUD remains a relatively strong and stable currency
Best Forex Strategy in 2021
There are a few things to consider before jumping into a strategy with a demo account. What is your personality? Do you want long-term investments or quick returns? How well-versed are you in the trading world in general? How many funds can you leverage and how much risk can you tolerate?
Keep asking yourself these questions as you read through our top strategy picks.
Channel Trading
Channel is one of the most popular and most successful forex strategies. It is straightforward and can help new investors understand basic concepts in the forex world. It’s also the cornerstone strategy you must learn before exploring more advanced options.
Visually speaking, the channel strategy is applied to a price corridor and uses two bars to determine the boundaries. You hold until the price approaches the opposite boundary.
Breakout Strategy
The breakout strategy focuses on market volatility and is frequently used by day traders, especially those doing scalping. The breakout indicates major changes which can help you identify a new trend. This strategy uses a resistance line to indicate the current trend’s price cap, and a support line to represent the current bottom price, which can also be used to establish your exit strategy.
Triple Candlestick
The triple candlestick is an effective method for new traders. As the name indicates, you use three “candles” to determine whether to buy, hold, or sell.
- The first candle needs to be either above or below the previous candle
- The second candle confirms the direction.
- The third one follows the trend established by the first two candles, and you decide whether to buy or sell when the third candle appears.
Pin Bar Trading
Pin bars are similar to the candlestick strategy but are more complicated. They’re also the most critical signals on the price chart. A trader mostly uses pin bars to determine a currency’s development trend, whether its value is growing or decreasing. Pin bar strategy is another good strategy for day traders to use.
Conclusion
Don’t feel overwhelmed if you still feel confused. Forex trading is best learned with hands-on practices. Therefore, choose the best forex strategy for you, then open a demo account with your chosen broker. A demo account allows you to experiment with these strategies and gain visual understandings of how each actually looks on the price chart. Since demo accounts don’t use real money to invest, you won’t need to worry about financial loss.
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