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TOP FOREX TRADING STRATEGIES FOR BEGINNERS IN LONDON

Basic knowledge of trading strategies will help you understand the market and form an essential foundation to build your ability to trade. Without understanding how trading works, it’s hard to know when or why you’re losing or why others are winning.

It means that without the required skills involved in forex trading, you may not be able to identify opportunities, where they exist and, more importantly, take advantage of them.

It is incredibly frustrating for most beginners who have no idea what they are doing wrong.

One day you’ll wake up with a head full of ideas on how to win in the markets. This will lead to greed and overconfidence, which will result in growing losses.

However, if you decide to start small and gradually move up in size, you will absorb the losses. Volatile market conditions make a good trading environment or a bad one. You can benefit from volatility by understanding how to trade professionally. However, this is only if you understand the risks involved.

Understanding market conditions is essential for any trader away from home because it helps you forecast what might happen in response to price movements. This then allows you to take advantage of your knowledge throughout the day.

Read and Understand the Trading Platform

The first step to trading is getting to know your trading platform. Many platforms will provide a tutorial or help file explaining how and what everything does and represents on their platform.

Reading through this information (and carrying it out) before you start trading can help you become familiar with reading charts, placing orders etc.

It also allows you to identify any limitations or features on the particular trading platform you use that may not suit your purposes (e.g. charting, related functions).

Watch the Price of an Asset Move Up/Down Using Line Charts

Before actually entering into forex trades, it will be worth watching some price action moving up/down in line with actual market movements. Do this first, without trying to predict its direction.

Preferably choose a more volatile pair (like EUR/USD). Study where the price of an asset has moved up or down and why (e.g. news items). This will help you identify patterns in the market movement.

Learn How to Read Candlesticks, Bar Charts and Line Charts

The three chart types: line chart, bar chart, and candlestick chart all provide different information about an asset’s price movements.

Candlestick Charts

This forex trading strategy is used for detailed analysis of prices over a certain period. Typically 15min-1hr candles for intraday traders and 1day-week candles for daily trading purposes.

Price action is represented in black or white colours.

Black candles typically indicate that the closing price was lower than the opening price.
White candles typically indicate an increased closing price, but not necessarily anything more.

Bar Charts

Bar charts are used to show the highest and lowest traded prices of a particular asset along with their trading volume over a specific period, i.e. 1day for a daily time frame 15min for the intraday time frame.

Line Charts

This offering is the simplest chart type to read. Different indicators are used to determine market trends.

Line charts are best suited to long-term traders looking at weekly/monthly charts.

The line chart displays only the closing price of an asset each day while comparing it to the previous day’s closing price.

Don’t Take Significant Risks

A stop loss is a great way to protect your capital when trading forex. Stop losses are used to limit your potential for loss by selling an asset or closing out positions if certain conditions are met.

You can place them on any side of an asset’s price movement (i.e. below/above) and specify what price level trading should be halted if the market moves against you.

The best time to use this strategy is before getting into any trade. Ideally, set up your trade with a stop loss beforehand then wait for the entry point.

Link to forex for more information.

Top Forex Trading Strategies for Beginners in London