The Forex market is full of competition and uncertainty. As a result of the high market volatility and liquidity, every trader needs to adopt a concrete strategy so that they can quickly identify profitable trade signals.
Many beginners become very confused about choosing the best strategy in this market. As a consequence, they choose the wrong method and can’t cope with the industry. In today’s article, we will help beginners to find the best and simplest design for them. There are a lot of simple plans, but we have carefully detailed three of them.
Breakout is regarded as an excellent and easier strategy to foresee a trend. A beginner can quickly identify when a trend is going to take place. Intelligent and smart newbies will wait for the breakout to take place. Sometimes, the price fluctuations reside between the resistance and support level, and this kind of market is known as a consolidated or sideways movement.
A breakout takes place when the price of a currency moves above the boundaries of the consolidated market. It will form new lows and highs. Many professionals and successful traders are abiding by this strategy. Whenever they notice a breakout in the chart, there is a high possibility of a trend, but it should be remembered that not all the breakouts indicate the beginning of an uptrend.
A breakout above the peak value or below the lowest value indicates a longer direction or trend. A breakout for a concise duration indicates a very short-term flow. It can also be said that one can study a breakout strategy to predict more accurately. Once a beginner gathers adequate knowledge of breakouts and identifying the upcoming trend, he should use stop-loss to eliminate any possible problems.
2. Moving average crossover
The moving average is regarded as the simplest technical indicator, and it is of two kinds – a simple moving average and an exponential moving average. To use it properly, the trader needs to introduce the software with the existing market price. The software will draw an average line of the current fluctuations. After you obtain the existing scenario, choose a timeframe of 10-days, 20-days, 50-days, or 100-days and introduce it to the indicator to draw another line. It is better to choose a timeframe to draw two lines based on the moving average – say – 50-days and 100-days. But remember, you need to use a premium platform to get the maximum benefit while using the moving average. Visit this page and learn more about SaxoTrader so that you don’t have to deal with low-end trading platforms.
To find the perfect trade, a rookie trader has to analyze the two-average line – one is the shorter timeframe, and another is the longer one. You can analyze the crossovers or interceptions of these two lines to find out whether the trend may move up or go down. If the shorter SMA intercepts the longer SMA and moves above it, then it can be a bullish movement. On the other hand, when the longer one moves up the shorter SMA, the upcoming trend can be a bearish flow. With the combination of moving average crossover and breakout, a beginner can effectively place their trades in the platform.
3. Carry trade
This is another simple strategy but it is widely used by professionals. In this plan, a newbie will buy a high-yielding asset against a low-yielding currency. The longer the position remains open, the longer the broker will continue paying that interest rate to his client. This method is also known as the rollover swap rate. While choosing this plan, don’t forget to check the rates of your broker because every broker has different rates. Many brokers don’t even offer this rollover strategy, and some offer this with a lower interest rate. But don’t be upset because there are a lot of opportunities out there.
These are the three simplest trading plans for newbies. We hope that starting to learn with any of these plans will help you to make profits in the trading industry.