When trading forex, a strategy is essential to keep you focused and disciplined. A good strategy helps provide you with insight into where or when to buy or sell a currency pair. However, not all strategies are created equal, and no single strategy is the best.
As you get started with currency trading, you need to understand that different strategies will work well for different scenarios. Learning how to create one that works for your trading style will see you begin your journey to earning $10000 weekly.
What Are Forex Trading Strategies?
If you’re a funded trader, you’ll need a trading strategy to help turn a profit from your investment. A strategy, in this case, refers to a technique used by traders to help determine whether to buy or sell a currency pairing.
Experienced traders trading on a prop firm, such as Audacity Capital, understand that such strategies can be based on fundamental or technical analysis. Others are even based on news events. An ideal strategy will comprise trading signals that influence buy/sell decisions.
Depending on your level of expertise, you can choose to create one for yourself or use those found online. Join us below as we discuss several strategies that can help you get started on making $10000 weekly.
The Best Trading Strategies for a Funded Trader
1. Scalping
Scalping is a popular strategy employed by experienced funded traders. It specifically focuses on small market movements and involves executing many trades with the hope of earning a small profit from each.
Scalpers, therefore, work to earn large profits by targeting many smaller gains. It’s a strategy that’s the opposite of holding a single position for multiple days or weeks.
Forex traders love it because of its liquidity and volatility. Traders using it will be looking to target markets where price action continues to move constantly. Their goal is to benefit from the fluctuations occasioned by small price increments.
If you’re to use this strategy, you’ll need to focus on profits of around five pips per trade. You also must remain hopeful that the many trades you have initiated will succeed. This is the only way you’ll get to earn a steady profit.
One major downside to scalping is that you can’t risk holding on to a single position for more than a few hours. Furthermore, you’ll need to concentrate on your trades and constantly analyze your charts to realize new opportunities.
2. Trend Trading
For traders who aren’t comfortable with the fast-paced movements of the scalping strategy, trend trading is a viable alternative. Traders on prop firms love it because it’s simple. Its only applicable criterion is to follow the direction of the market movement.
The first tip to getting started is to establish the prevailing trend direction. You’ll then need to continue analyzing the currency trading market. This allows you to leave your position when the trend begins to reverse.
With the trend trading strategy, its biggest benefit is that you don’t need to worry about timing. You only need to wait for a confirmation signal to help in preventing a false start.
Please be informed that no trend remains constant, as it will experience multiple fluctuations. If you’re a savvy trader, the trick will be to set a limit that automates your entry and exit positions. With these limits in place, it means the small fluctuations happening in a trend won’t affect you too much.
Most of the trend trading strategies you’ll encounter are founded on momentum indicators. You can use these indicators to analyze the strength of each trend. Examples of such indicators include relative strength index and oscillator indicators.
3. Price Action Trading
As its name suggests, the price action strategy focuses on making trade decisions based on price movements. This calls for currency trading professionals to incorporate technical indicators such as Bollinger Bands into their decision-making process. Examples of price action strategies that you may want to use are breakouts and reversals.
Although technical indicators aren’t part of the price action strategy, you can include them as a supporting tool. You may also want to incorporate indicators such as moving averages to assist you in identifying trends.
The main benefit of using the price action strategy is that your trading charts will remain clean. Additionally, you’ll have a reduced risk of experiencing an information overload, which may impact your decision-making process. Note that employing multiple indicators on a trading chart can send conflicting signals, which may prove confusing.
4. Daily Chart Forex Trading Strategy
The most experienced funded traders swear on the benefits of daily charts rather than short-term strategies. Daily charts have less market noise compared to the Forex 1-hour trading strategy. Such a setup can provide you with as much as 100 pips a day because of its longer time frame.
It’s worth noting that Daily Forex Signals can prove to be more reliable than lower timeframes. Their reliability means that the potential for turning a profit is also higher. However, you should note that there are no guarantees when it comes to currency trading.
As a trader, you’ll need to be concerned about random price fluctuations and daily news happenings. These are the factors that will influence how much profit or loss you make in your trades. This strategy is based on three chief principles:
- Identifying the Trend: Currency markets tend to trend and consolidate, with this process repeating itself multiple times.
- Start by identifying the long, drawn-out movements. You can do this by studying the price movements of a given currency pair over the last few months.
- During your analysis, make sure to establish the swing highs and lows. Use the current charts to reference this price information and learn the market direction.
- Stay Focused: Daily chart forex trading requires patience. Resist the urge to get started on trading right away. The goal here is to stay out of the market as you preserve your capital for a worthier opportunity. Staying focused on the long-term goal is the key to succeeding when using this strategy.
- Use Large Stop Losses: Learn about the large intraday swings happening in the currency market. Using large stop losses doesn’t mean that you risk large amounts of your capital. Its goal is to enable you to deal with any random volatility that may arise during the trading day.
Components of an Effective Trading Strategy
Many funded traders begin their journey to making $10000 weekly by creating a simple trading strategy. For the strategy to work, it will need to include several factors:
- Market selection
- Position sizing
- Entry point
- Exit point
- Trading tactics
If your strategy is to work, you must make sure that it has all these components.
Conclusion
Currency trading strategies provide funded traders with a basis for trading forex markets. Savvy traders learn early on how to follow a strategy, which then defines the type of trader they’ll become. For instance, by defining the indicators you’ll use to trade and when you would like to trade, you can get started on creating a unique trading strategy. Once you have it up and running, use it to identify patterns in the market and continue to make changes to it to boost its effectiveness. More importantly, you must remember that what works for one trader might not work for you! To learn more about currency trading, visit Audacity Capital today.
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