Brazilian Swing Traders: Profiting In The Forex Market – About 80% of traders fail because they overcomplicate the trading process. Discover 4 simple trading strategies for every trading style.
Let’s understand the basics first. Forex trading involves buying and selling currencies with the hope of making a profit. It is different from investment. To successfully trade forex, traders must use effective trading strategies.
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There are four main trading styles that traders can use to make a profit in the forex market: scalping, day trading, swing trading and position trading. In this article, we will introduce each trading style as well as provide a popular trading strategy for each style. In most cases, these Forex trading strategies can be applied to any trading style but work best as described in the article.
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Scalping is a trading style that involves making multiple trades over a short period of time, usually minutes or seconds. Scalpers aim to make small profits quickly, but these small profits can add up over time. The key to successful scalping is having a good understanding of the market and reacting quickly to price changes.
It is important to remember that volatility is important for scalpers. A popular scalping strategy is the “Fast Breakout Strategy.” This strategy involves using a one-minute chart while looking for opportunities to enter and exit trades.
Scalpers typically use resistance/support levels to identify entry and exit points. This may actually be the best forex scalping strategy because of its simplicity. Let’s go inside.
It always starts with identifying trends. This is important to remember. A trader should start by identifying the trend by looking at the price chart of the currency pair they want to trade.
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They should examine highs along with price swings to see which direction the price is moving. This strategy does not work when volatility is low and the market moves sideways.
Once a trader has identified a trend, they should look for key levels of support and resistance. These levels are areas where price has previously reversed or stalled. Traders can identify these levels just by looking at the charts.
A trader should look for breakouts above or below key levels of support and resistance. Breakouts occur when price moves beyond an important level of support or resistance, signaling a potential trend reversal or continuation.
When there is strong selling or buying pressure, the market often moves below or above a certain level. Even if it turns out to be a false breakout, the trader should be able to move their stop loss up to the break even to protect their capital.
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After a trader identifies a breakout, they should enter the trade by buying or selling the currency pair. They should use market orders to enter trades quickly without any hesitation.
This means that they should expect not to enter into trades impulsively as these trades usually result in losses as they are executed emotionally. Here is an example of where a trader should enter when a breakout is occurring.
To manage their risk, traders should set stoplosses and take profit levels. A stoploss is a predetermined point at which they will exit a trade if the price moves against them, while a take profit level is a predetermined point at which they will exit a trade if the price moves in their favor.
A trader should monitor the trade closely and be ready to exit if the price moves in their direction. Because this is scalping, a stoploss of 5 to 10 pips should be sufficient when trading.
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Overall, the fast breakout strategy involves making multiple trades in a short period of time, so traders need to repeat these steps multiple times to be successful. In addition, it is important to have a good understanding of the market and react quickly to price changes. With practice and discipline, traders can become successful scalpers in the forex market.
However, traders should keep in mind that the faster the trade, the harder it is to manage emotions as just a few pips can represent hundreds of dollars. Traders must ensure that they do not overtrade, for example, trading only two or three hours a day.
Forex day trading is a trading style that involves buying or selling currencies within a single trading day. The objective of day traders is to profit by taking advantage of the price movements of the market during the day. Successful day traders are usually disciplined and have a good understanding of market trends as well as technical indicators.
A popular forex day trading strategy is the “EMA 50 Day Trading Strategy.” This strategy involves identifying key levels of support and resistance while looking for breakouts above or below these levels. The most commonly used timeframes for this strategy are the 5-minute, 15-minute and 30-minute charts.
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A trader should look at the five minute chart of the currency pair they want to trade and identify the trend. They should aim to identify which direction the price is moving by looking for higher highs and higher lows for uptrends or lower highs and lower lows for downtrends.
Using technical indicators such as moving averages or stochastic oscillators, the trader should look for opportunities to enter the market. For example, they can use the 50-period moving average (EMA50), then wait for the price to move above or below it to signal a potential entry point. This strategy should be supported by considering support and resistance.
Once a trader has identified the entry point, they should enter the trade by buying or selling the currency pair using market orders to quickly enter the trade. Every time a trader sees the currency pair in this example, EUR/USD, they should be looking to sell and vice versa.
Red levels are marked as large potential sell entries and green levels are potential buying opportunities. In the first red line, the currency pair broke below the EMA 50, falling below the support. A good time to enter is when a downtrend is prevailing.
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A losing buy trade followed, but was immediately followed by a winning sell trade. After the downtrend ended, EUR/USD formed a level that broke with the EMA 50, which turned out to be a fantastic buy trade.
To manage their risk, a trader should set a stop loss and take profit level. Just to reiterate, the stop loss is a predetermined point at which they will exit the trade if the price goes against them, while the take profit level is the point at which they will exit the trade if the price goes in their favor.
In this case, traders should always set the stoploss above or below the nearest resistance/support. In the first example, the trader will enter a sell position where they need to place a stoploss (approximately 20 pips) above the nearest resistance.
When the position moves 20 pips in profit (1:1 risk reward ratio), the stoploss should be moved to break even (BE) – the no-loss position to protect capital. In this case, the trade will end at break even, but the same should be applied to other trades, aiming for at least 1:2 RRR. The second trade will be a loss, but the third and fourth trades will yield the desired profit.
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Day trading involves making multiple transactions in a single trading day, so traders need to be alert and react quickly to price changes. By using effective trading strategies like these while maintaining discipline and focus, traders can increase their chances of success in the forex market. It is important to remember that day trading usually involves making only a few trades a day. This is not like scalping, where traders can trade tens of times per day.
Swing trading is a trading style that involves holding positions for several days to several weeks. Swing traders aim to profit from large price movements in the market. Successful swing traders usually have a good understanding of market trends and use technical indicators to help identify entry and exit points.
This trading style is the least stressful of the first three trading styles in this article. A popular swing trading strategy is the “trend rider”. This strategy includes using trend lines, critical levels, 200-day moving averages and the OsMA indicator.
Swing traders will look for buying opportunities when the trading setup indicates a continuation of the uptrend and vice versa. It is important to see at least 3 out of 4 confirmations.
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As always, a trader should start by identifying the trend by looking at the price chart of the currency pair they want to trade.
They should find the general direction that prices are moving by examining the highs and lows of price fluctuations over longer periods of time, such as days or weeks. The most commonly used timeframes for this strategy are weekly, daily or 4-hour.
After a trader has identified a trend, they should look for key levels of support
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