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5 best forex trading strategies for Africans

Business
Forex trading strategies involve technical analysis, fundamental analysis, or a combination of both. When African traders have a solid trading strategy it will allow them to carry out a comprehensive market analysis.

A forex trading strategy or a trading style can be defined as a system that forex traders can follow. This system determines when retail traders enter and exit the markets, where they place their stop-loss and take-profit targets and at which price level, and several other factors.

Forex trading strategies involve technical analysis, fundamental analysis, or a combination of both. When African traders have a solid trading strategy it will allow them to carry out a comprehensive market analysis.

This will help traders execute trades in a live market and monitor the market movement to increase their potential profit while minimising the risks that they face. Several popular strategies can be applied in the forex market including swing trading, position trading, day trading, momentum trading, and several others, but these are currently the best strategies for African traders.

 Price Action Strategies

Price Action trading is one of the popular trading strategies that can be used across different financial markets, including foreign exchange trading. When African traders use this strategy, they study historical prices to develop technical trading strategies.

Price Action can be used either as a standalone technique or it can be used with different technical indicators. Technical analysis is a dominant tool during this strategy and fundamental factors are not typically used, but traders often incorporate economic events by consulting an economic calendar.

 Scalping

Scalping is a popular day trading strategy where forex trader focus on small price movements in the financial markets. Retail traders open many trades, and they aim to make small trades per position.

Scalping is a popular forex trading strategy because of the inherent liquidity and volatility that the forex market is known for. Scalpers are always looking for financial markets that have constantly moving price action, allowing them to capitalize on small price fluctuations.

 News Trading

Professional traders are fond of using news trading strategies based on fundamental analysis and technical analysis, allowing them to profit from increased volatility that can be noticed after key news releases. News trading is one of the most effective forex trading strategies where a wide range of foreign currencies can be traded.

Experienced traders can use an economic calendar to identify key data releases. The news trader can then observe the current market price to determine the key support and resistance levels in the currency market, allowing them to react quickly to enter or exit the market.

 Bollinger Band Forex Strategy

This forex trading strategy is used to establish the support and resistance levels in the forex market. There are three bands used in the tool namely the central line, which is a simple moving average (set to 20-days), while the upper and the lower lines measure volatility in the forex market.

The bands will widen if the forex market is highly volatile while the bands contract if there are more stable conditions in the market.

 Breakout Trading Forex Strategy

Breakout trading strategies involve the process of taking a position at the earliest point during a trend. The breakout will occur when the market price breaks from a consolidation or a trading range, especially when either the support or the resistance level has been met and subsequently surpassed.

This is a very important strategy used by forex traders during volatile market conditions. Breakouts in the forex market tend to happen at the historic support or resistance levels. However, it depends on how strong or weak the overall market is over a period.

Also Read: Binary Trading – The Ultimate Beginners Guide for Zimbabweans

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