Day trading is the most popular form of Forex trading and there’s a reason for it. There are no rollover fees whatsoever, meaning that traders don’t leave their positions open for the night.
It also means that they’re primarily profiting from comparatively minor fluctuations. Such trading requires a complete understanding of the market trends, availability of the necessary trading instruments, a broad newsfeed on the topics related to your pairs of choice, and a quick reaction.
The only thing to worry about now is – what strategy should you pick? Of course, there are many Forex day trading strategies, but if you want a narrowed-down list of the most useful ones – check out this guide on day trading from JustForex.
It has a list of the strategies and valuable tips for beginners, with detailed explanations. But here, we’ve decided to pick the best Forex trading strategy for beginners, so the list is going to be narrowed down to one item, and we’re about to begin!
Forex Trend Trading Strategy
With strategies for beginners, it’s not all about their effectiveness but also – about ease of understanding. You don’t want to use a strategy that needs a whole team of analytics to figure out or a 99% sure one that requires billions to make at least some profit. We’ve picked trend trading because it’s intuitively understandable, and the best thing about it is that if you get better at it – you’ll be able to use this knowledge with other strategies afterward.
So, what actually is trend trading? When related to Forex trading, the trend means that if there is a market movement in progress – it will continue for some time. And trend trading is all about spotting a price movement in your chosen direction and entering the trade while it hasn’t left the station yet.
But of course, it’s not enough to spot the trend itself; you need to determine how long it will continue to exit the trade with maximum profits. And if you’re taking Forex trading seriously, it’s better not be guesswork. So let’s talk about how you can spot the trend and make sure it’s the real one.
How to Spot a Strong Trend
Firstly, you need to spot a trending market, which is relatively easy. If both highs and lows are getting higher, there’s an obvious uptrend, and if they’re getting lower – the downtrend is there. And here’s how you put it to work:
- You need to enter the trade as close to the breaking point as possible to ensure maximum profitability, and that’s why you need to spot the trend before it even starts. If there was a downtrend for one of the pairs you’re monitoring and suddenly you see that both highs and lows are higher than before – that’s the breaking point!
- Analyze the support/resistance retests and the time between them. If you see that the resistance level is being tested over and over again – that’s not a clear indicator of a coming uptrend, but if retests happen more and more frequently over time – then you can keep an eye on it and soon see an uptrend.
Remember that this material is but a first step into actual Forex trend trading. It is designed to show you the basics and help you figure out whether you want to spend more time learning about it and maybe picking it as your first trading strategy.
It will also help you develop basic knowledge of trends and how they work, which, in time, can be used in more profound trading strategies.
And the last piece of advice first for all sorts of Forex trading strategies: don’t ever forget to put a stop-loss order, but may it never get triggered!