Beginners do not fully understand how to behave on the currency market and what to do. Being inexperienced they can make wrong decisions and trade at a loss. Most often they do not stick to the certain plan and act impulsively, emotionally. What strategies are suitable for beginners will be described in this article, written with the support of experts from broker Imperial Wealth International.
What are trading tactics?
A Forex strategy is a set of principles and rules that determine when and how to open a position in the market.
Tactics can be based on different factors, including time frames, indicators, psychological aspects, etc. Each trading plan is unique. It fits the trader's goals and style.
Experts at Imperial Wealth International brokerage highlight several key elements of strategies:
- input and output signals;
- risk management. It is mandatory to have rules for risk management, because it allows you to preserve capital and prevent large expenditures;
- testing and optimization. Before using a certain trading method, it should be tested on historical data or a demo account.
Psychological aspects are also important. A trader must be able to control emotions and follow tactics even under stressful conditions.
The experts at Imperial Wealth International broker distinguish the following types of strategies:
- trending. They are based on finding and trading in the direction of the next trend;
- scalping. A short-term plan in which the trader opens/closes positions within a few minutes, sometimes even seconds;
- counter-trends. This method is more risky, because it is based on trading against the current trend;
- Support and resistance tactics. Here charts are used to determine the key levels at which a change in price direction can be fixed;
- strategies based on the news. Traders use economic data to make decisions about entering and exiting positions. This is effective during significant market events. But using tactics requires a quick reaction, extra time for monitoring;
- strategy with the use of robots. In this case, software is used that automates the process. Useful for beginners who do not have enough trading experience.
This is not the whole list of tactics and some of them can combine several approaches. Each player is unique, so the tools are tailored to his own style and knowledge.
Broker Imperial Wealth International on strategy for beginners
There is no ideal scheme, but the trading plan should be as uncomplicated and understandable as possible. A trader with little experience would be better off starting with a trend chart. It is based on the idea that a price movement in a trend can be identified and used when making decisions about opening/closing a position. This is one of the popular methods in Forex.
The experts at Imperial Wealth International brokerage offer a variant of a simple trending algorithm that a beginner can take a closer look at:
- Determining the direction of the trend. The moving average can be used for this purpose. If the price is higher, it indicates an upward move and vice versa;
- enter the market in the direction of the trend. You can open a long position in an upward move or a short position in the opposite direction;
- set a stop loss. This will allow you to control the risks. A type of order that closes a trade when a certain price level is reached and a set threshold is exceeded.
When the trend changes, it is necessary to close the position by fixing the profit or loss. The experts at Imperial Wealth International broker explain that this method does not guarantee an instant profit, but it is the easiest and most convenient. Newcomers should remember about the adaptability of the scheme, because the market is volatile. Also, it is necessary to carefully study the descriptions in order to better understand the principle of operation. From trading plans with a high level of profit, the experts recommend to refuse at the first time.
How to choose a strategy for a beginner? Imperial Wealth International broker explains
Elements of popular programs can be found in every chart, so even basic training in some cases will be enough to select the tools and create your own system of rules. Forex Imperial Wealth International has a good educational platform where all materials are provided for free, regardless of account type.
This is where the novice player should start:
- determine the style. This will help you understand what strategy to use and how long it will take to reach the income of interest;
- Take into account the available experience. Sophisticated tactics are suitable for professionals. Without the right training, you can get confused and lose money;
- study fundamental and technical analysis;
- practice on a demo account;
- seek help from more experienced traders. There are special forums where many people exchange opinions and share their recommendations.
The experts at Imperial Wealth International brokerage advise remaining flexible when choosing your plan. Forex is changing, so the system of rules should not only be clear, but also adaptive.
Broker Imperial Wealth International tells about suitable strategies for inexperienced players
In addition to the trending approach, beginners can use the following trading approaches:
- Breakout strategy. It is based on the assumption that when the market price crosses a support or resistance level, a new trend appears;
- Candlestick Strategy. The candlestick chart shows price changes over a certain period of time. Beginners can use it to find buy/sell signals;
- Multicurrency correlation tactics. It is based on the analysis of the relationship between some currency pairs. Suitable for identifying currencies moving in the same direction;
- impulse trading method. If the price moves in one direction, it signals a possible continuation of the trend;
- oscillator strategy. Indicators showing oversold/oversold market are used;
- the method of "breakdown candlesticks". The position should be entered at the breakdown of the previous price level. The experts at Imperial Wealth International broker recommend applying it at the end of the trading day.
The choice of a trading plan depends on style, risk profile, and experience. It is important to study everything carefully before using it.