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Top 11 Forex Trading Strategies in 2023


Trade popular currency pairs at low cost with Vantage. Vantage is a leading regulated forex broker offering access to the world’s most popular currency pairs. With Vantage forex trading, traders can explore trading opportunities from price movements in all directions in the largest and most liquid financial market in the world.  

Swing Trading

Key features: 

The idea behind Swing Trading is to identify an imminent “swing” within a trend, and then entering into a trade before the swing occurs to capture the ensuing profits.  This strategy is often practised as a medium-term strategy that lasts from two days to several weeks – depending on how long the trend goes on. To succeed in this forex trading strategy, traders must be comfortable holding their trades for a relatively longer period; closing trades too early will cause the trader to miss out on further gains in the future.  

Swing Trading can be challenging as it means having to deal with short-term volatility. You will also need a larger capital to absorb price changes that can occur throughout the trend.  

News Trading

Key features: 

A beginner-friendly forex strategy, News Trading revolves around tracking news and headlines that have a high likelihood of causing a currency pair to spike or plunge, and taking up trade positions accordingly. Some of these events include elections, monetary policy changes, interest rates announcements, inflation, retail sales, unemployment rates, consumer confidence surveys, etc. 

Bear in mind that important news or developments tend to increase volatility in the forex market, and you should not neglect proper risk management when trading on the news. 

Day Trading

Key features: 

In Day Trading, a forex trader opens and closes their trades within the same day. No positions are held overnight, and any attempts to capture market returns are made within the trading day itself.  This is done for several reasons. Day Trading allows forex traders to potentially benefit from the inherent volatility of the market, which creates opportunities for profits due to the potential for sharp price action to take place throughout the day. At the same time, it allows traders to avoid risks that can arise from larger price movements on a macro level, or price gapping overnight. The latter can occur when the markets are closed, leaving traders with no way to react.  

Day Trading is an advanced forex strategy. Success requires in-depth knowledge of the market and world events, the discipline to stick to an established trading routine, while being able to flexibly respond to changes.  

Position Trading 

Key features: 

Position Trading is an advanced forex strategy you would use if you’re looking to make a long-term trade. It is made to ignore short-term price movements in favour of identifying and profiting from longer-term trends. This strategy simply entails holding a forex position over a long term, often for months or even years. While this may sound simple, seeing it through may be the opposite. Before attempting a Position Trading strategy, you have to be well-capitalised in order to cope with short-terms swings and avoid margin calls. There are also overnight funding fees in spot markets that will further eat into your trading account balance. 

This is also a high-risk strategy, as your losses can stack up over time. However, if the trade goes in your favour, you can potentially enjoy high returns as well. 

Range Trading 

Key features: 

In a Range Trading strategy, the idea is to make several trades while the currency pair moves in a sideways pattern, bouncing between the level of support and the level of resistance over a protracted period of time. You may recall that when the market moves sideways, it is said to be in a consolidation phase. This is also known as a “range-bound market” among forex traders using Range Trading.  

Range Trading is slightly more complex as it involves using both long and short positions. A trader buys as the price moves downwards towards the support level, and sells as the price moves upwards towards the resistance level.  

Carry Trade

Key features: 

A Carry Trade strategy revolves around deriving a profit from the difference in yield between two currencies. To make this strategy work, you have to pair a currency with a high interest rate (the “base currency”) with another currency with a low interest rate (the “quote currency”). However, as this strategy is highly sensitive to market sentiments, this strategy should be limited when there is a high level of fear or uncertainty.  

Price Breakout

Key features: 

A popular, beginner-friendly forex trading strategy, the Price Breakout strategy revolves around spotting price breakouts, which can signal the start of a new trend, informing you of a potential entry point.  It’s important to understand that forex pairs sometimes spend a period of time ranging between levels of support (the “floor”) and resistance (the “ceiling”). This is known as consolidation. A breakout occurs when the price moves beyond the consolidation range. It can go in two directions: beyond the support level (“breaks to the downside”) or beyond the resistance level (“breaks to the upside”). 

Why we should pay attention to breakouts is because they can signal the start of a new trend which you can trade, but this is not guaranteed. The proper use of stop-loss is necessary to make up for the shortcomings of this strategy. 

Trend Trading

Key features: 

Trend trading is an overarching forex trading strategy that attempts to identify an emerging trend, and trade along with it. It is a dynamic and fluid strategy that requires traders to be able to keenly discern trends, and deploy the right trades as trends shift and evolve over time. Trend trading has overlaps with several distinct forex trading strategies, such as momentum trading, moving average strategy and price breakout strategy. However, these strategies share a similar idea, and may be utilised together in holistic fashion.  

Price Action Trading

Key features: 

Price action trading focuses purely on the price action of currency pairs as the basis for making trading decisions. Traders deploying this method would only look at candlestick patterns and drawing tools, eschewing most other technical analysis tools or indicators. Interestingly, purists of Price Action trading maintain that even fundamental analysis and macroeconomic data can be ignored, as all price-moving events will be reflected on a chart.  

Despite this seemingly pared-down approach, price action strategies have been proven to be effective, making the strategy a popular one among traders. 

Grid Trading 

Key features: 

In Grid Trading, a forex trader places multiple buy and sell orders at fixed intervals or price levels to profit from market volatility within a defined range. This strategy works by taking advantage of the fact that during a ranging phase, price tends to move back and forth between defined support and resistance levels. Furthermore, once the appropriate buy or sell orders have been set up at fixed price intervals (aka, setting up the grid), the actual trades can be automated via the use of trading software. This relieves traders of the stress of having to make multiple trades themselves.  

However, this does not mean a grid strategy should be left to run on its own over a prolonged period. Traders must constantly monitor the trade and be prepared to make changes in tandem with market turns. 

Retracement Trading

Key features: 

Retracement Trading in forex attempts to use the appearance of a price retracement as a signal to enter a trade. This strategy is a variation of price action strategy (see above). A retracement is a temporary reversal of price action within a larger trend. So, for instance, if the price has been going up for several days in a row, goes down for one day, starts going up again immediately after, a retracement has just taken place. The core idea behind Retracement Trading is that when a retracement appears, the price action tends to resume moving in the initial direction – this makes a retracement confirmation of a trend continuation. Thus, in the scenario above, it is likely that the price action will continue to trend upwards.  

Learning to properly spot retracements on a price chart can be valuable in improving the quality of your trades. However, being overly reliant on retracements can backfire – you may miss out on other trading opportunities while waiting for a retracement to show up.  

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