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2022-04-08 • Updated

Best Forex Strategies in 2022

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Forex is the largest and most liquid financial market in the world, with a daily trading volume of about $6.6 trillion. The market is open 24 hours a day, except on weekends. In 2022, every day is full of opportunities to buy, sell, and earn. So, you can try your hand at Forex almost any time, even if you are a beginner. But in order to start trading and making money, you need to choose a Forex trading strategy that will help you take the first step in the right direction.

How to choose the Forex trading strategy

There is no single answer when it comes to choosing the best and most profitable Forex trading strategy. This means you need to choose a strategy that will fit your individual lifestyle and personality type. How to do it? Ask yourself how much time you want to spend on Forex. Are you ready to stare at screens all day? Or would you rather spend just 30 minutes a day?

Each Forex trading technique is specific and requires certain skills. They differ mainly by the time horizon, that is, the amount of time a trader wants to hold an open position. Some traders – for example, scalpers – trade on very short timeframes, while others prefer to trade for a longer time. But let’s get into the details.

Best Forex trading strategies in 2022

Forex scalping, day trading, swing trading, and position trading are four popular Forex trading techniques that have proven to be successful in 2022. They differ by the typical time involved, ranging from short-term to long-term. This guide will introduce you to the best Forex strategies.

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Scalping

Scalping is the fastest trading strategy when a trader opens and closes many positions in just seconds or minutes. The profit from one trade is usually small and amounts to only 5-10 pips. That is why traders like use one popular trading tip. They use leverage such as 1:500 and make good money as a result.

Usually, scalpers prefer to trade the most liquid Forex pairs like EURUSD or USDJPY. If you want to try scalping, you should find a broker with low spreads and fast order execution.

Pros

  • With scalping, you don’t need to understand technical and fundamental analysis. To trade, simply follow the price.
  • Thanks to the leverage and Cent accounts, you can start with a minimum deposit of just $1.

Cons

  • Scalpers must have strong nerves and ultra-quick reactions.
  • The choice of financial assets may be limited as profit is significantly affected by spreads.

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Day trading

Day trading is another short-term strategy designed to trade any financial instrument within a single day. In other words, all positions are closed before the market closes. If you want to trade for short periods of time but aren’t comfortable with scalping, day trading can be an alternative. It is probably the most popular Forex trading technique in 2022.

On average, active trading takes six hours a day. As for profits, a day trader typically earns between 20 and 100 pips, depending on the instrument. Therefore, traders “bet” not on high profits from one trade but on the number of trades and the speed of their execution.

Intraday trading is very sensitive to any market news. That is why scheduled events like economic statistics, interest rates, GDPs, and more tend to have a strong impact on the market. You can find all of these events in the Economic Calendar. This strategy will save you time and allow you to make a quick profit in 2022.

Pros

  • You do not take overnight positions with day trading, so you don’t have to pay swaps.
  • Day trading carries less risk than other strategies, thanks to the ability to set a narrow Stop Loss.

Cons

  • This strategy will not work for you if you have a full-time job.
  • You need to make quick decisions on trades.

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Swing trading

Swing trading is a medium-term trading strategy in which positions can be held for a few days or weeks. The trader’s goal is to enter the market at the beginning of the cycle and capture the maximum movement. A distinctive feature of this technique is that only profitable trades are held open. If the price reverses, traders immediately close the trade and fix the loss.

Many people come to swing trading intuitively. For example, a day-trader opens a position but sees that its potential has not yet been exhausted by the end of the day and decides to move the position to the next day. Thus, he increases his profits. In addition, he has more time to think over his next plan of action.

Pros

  • Unlike day trading or scalping, swing trading can bring you really impressive profits on a single trade.
  • It requires much less time and control from you.

Cons

  • Starting from scratch is quite difficult, as this strategy requires at least minimal experience.
  • Swing traders often miss out long-term Forex trends.

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Position trading

Position trading is a long-term strategy that involves keeping a trade open for an extended period of time. Position traders hold positions for several weeks, months, and even years in some cases. The aim of this Forex trading technique is to identify a market trend, buy into it, and sell out when the trend reaches its peak.

To make a profit, the position trader has to identify the right entry and exit prices. That is why skills in fundamental analysis and technical analysis are a must.

Pros

  • Position trading is much less stressful than day trading.
  • You can combine position trading with your daily job as you don’t have to monitor your trades on a daily basis.

Cons

  • You should have a large deposit to make big profits because trades are rarely made.
  • If the position remains open for a long period of time, the swap fee can be huge.

Forex strategies: a summary

Identifying a successful Forex trading strategy is the key to your success. Whether you choose Forex scalping, day, swing, or position trading, your goal is to eliminate losing trades and achieve more winning ones. A little training is never too much for achieving good results.

Find the built-in educational sections in your FBS Personal Area. All educational materials are divided into three levels: Beginners, Intermediate, and Advanced. Lessons are free, so give them a try!

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