There are several other strategies that fall within the price action bracket as outlined above. Fundamentals are seldom used however, it is not unheard of to incorporate economic events as a substantiating factor. Price action can be used as a stand-alone technique or in conjunction with an indicator. Price action trading involves the study of historical prices to formulate technical trading strategies. The strategy that demands the most in terms of your time resource is scalp trading due to the high frequency of trades being placed on a regular basis. On the horizontal axis is time investment that represents how much time is required to actively monitor the trades. Position trading typically is the strategy with the highest risk reward ratio. On the vertical axis is ‘Risk-Reward Ratio’ with strategies at the top of the graph having higher reward for the risk taken on each trade. To easily compare the forex strategies on the three criteria, we've laid them out in a bubble chart. There are three criteria traders can use to compare different strategies on their suitability: Every trader has unique goals and resources, which must be taken into consideration when selecting the suitable strategy. There are countless strategies that can be followed, however, understanding and being comfortable with the strategy is essential. Forex Trading Strategies That Workįorex trading requires putting together multiple factors to formulate a trading strategy that works for you. The diagram below illustrates how each strategy falls into the overall structure and the relationship between the forex strategies. Forex Strategies: A Top-level Overviewįorex strategies can be divided into a distinct organisational structure which can assist traders in locating the most applicable strategy. A good forex trading strategy allows for a trader to analyse the market and confidently execute trades with sound risk management techniques. There are various forex strategies that traders can use including technical analysis or fundamental analysis. Discover what type of forex trader is buried within your DNA with our interactive DNA FX Quiz What is a Forex Trading Strategy?Ī forex trading strategy defines a system that a forex trader uses to determine when to buy or sell a currency pair.