Top Forex Trading Strategies
Updated April 14, 2025
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Forex trading is the process of trading in currencies with the goal of buying and selling foreign currencies to make a profit. This is typically done in currency pairs, by taking advantage of market fluctuations to buy and sell according to the difference in values.
For trading to work effectively, traders need to take advantage of the volatility of foreign exchange markets. These markets are continuously changing and can offer lucrative profits when trades are made at the right times. For this to happen, it means making use of liquidity to buy and sell quickly.
Plus500 offers traders the opportunity to trade forex contracts for difference (CFDs) 24 hours a day, five days a week. There are also tools to help with analysis and strategy creation so that even beginner traders are able to effectively complete forex trades.
In this article, you will learn more about five core forex trading strategies, how to choose the right one for you, and how the Plus500 platform can help you to achieve your trading goals.
80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. *CFD trading via Plus500’s demo account.
Why You Need a Forex Trading Strategy
No matter which type of trading you choose, it’s important to have a trading strategy.
This helps you to fine-tune your individual limits, calculate the levels you’re comfortable trading, and avoid unnecessary risks and losses.
Creating a trading strategy will mean that you’re able to define entry and exit rules, which mitigate risks and enable you to effectively manage risks.
Your trading strategy can be tailored to your individual level of experience, the goals you want to achieve, and the time you have available to devote to trading.
Having a structured, methodical approach also helps to create discipline and avoid the associated risks of emotional and impulsive trading.
Plus500 offers users the opportunity to practice their forex trading strategies using demo accounts. This is an excellent tool for developing your skills, learning how trading works and understanding the levels of risk you’re comfortable with.
80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. *CFD trading via Plus500’s demo account.
Top Forex Trading Strategies
There are five core forex trading strategies, each with a different array of benefits and risks.
The strategy that best suits you as a trader will largely depend on your experience, the amount of time you can devote to trading, and how comfortable you are with risk.
Using the Plus500 demo accounts and trading platform, it’s possible for you to implement each of the top five trading strategies.
Trend Following
Trend following trading is the process of identifying trends in currency markets and trading in the direction of the trends.
This involves an analysis of market movements and being able to identify when markets are going to continue moving in an upward trajectory.
Using the Plus500 charting tools, like moving averages, RSI, and trendlines, traders are able to accurately identify market trends and capitalize on them.
Range Trading
Traders who use range trading are able to accurately identify the average minimum and maximum values of currencies. They are then able to invest when a currency is at the bottom end of its value range and profit when it increases.
This form of trading works best in sideways markets and requires pattern recognition skills, as well as an ability to analyze data over a period of time.
Range trading could potentially be a riskier form of forex trading, so it’s important to make use of Plus500’s risk management tools like stop-loss and take-profit options.
Breakout Trading
For breakout trading to work, traders need to enter their trades when prices break out of a key level. This will be a position defined in your individual forex trading strategy and can be influenced by the use of alerts, global news, and economic data.
The Plus500 trading platform offers users a range of tools to help with breakout trading, including continuous up to date alerts and an economic calendar detailing all of the important key dates for economic news around the world.
Scalping
Scalping involves high-frequency, low-margin trades with quick execution and low spreads.
Forex traders using scalping as a strategy need to be able to spend a large amount of time monitoring the markets and performing trades, so it’s not a suitable strategy for everyone.
Forex traders using the Plus500 platform will be able to take advantage of mobile app options and real-time pricing information to perform trades wherever they are and at any time.
Swing Trading
Swing trading involves taking advantage of profits from movements in the markets. Traders will often hold their market positions for several days or weeks before a change takes place and then complete a trade when a profit is available.
To effectively use this strategy, technical and fundamental analysis are key. Having a thorough understanding of market trends, movements, and global changes is essential.
This trading strategy is ideal for traders who are only looking to devote a small amount of time to their investments. Using the Plus500 alerts system and charting features, you will be kept up to date with forex market changes, without the need to spend a lot of time on the platform.
How to Choose the Right Strategy for You
Not every trading strategy is suitable for every person, and it’s important to find the strategy that works best for you as an individual.
This might mean trying out a few different options using the Plus500 demo account tools, or even combining a range of strategies to cover a number of options.
Factors such as your risk tolerance, trading style, and experience level will all have a bearing on the type of forex trading strategy that suits you.
Other factors to consider include the amount of time you’re able to commit to trading, the amount of capital you have at your disposal, and your ability to analyze charts and other data quickly.
Using the Plus500 demo account features, you can test a variety of strategies and develop a method that works for you. By replicating real-world scenarios, you can practice and improve on your skills before risking real money.
80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. *CFD trading via Plus500’s demo account.
Frequently Asked Questions
Trend following is widely considered to be the best forex trading strategy for beginners. However, by using the demo account tools on Plus500, you will be able to test out a range of strategies and find the one that suits you.
Yes, and using a range of strategies can help to mitigate your risks.
No, automated forex trading isn’t available on Plus500, although you can set automated limits for stop-loss and take-profit orders.
Demo platforms are an excellent way of practicing your strategies. Using the Plus500 demo platform, you will be able to test out your forex strategy in a way that simulates real-world trading. This way, you can fine-tune your approach before risking real money on the markets.
Yes. Trading is inherently risky, but some strategies will carry more risk than others. It’s important to mitigate these risks as much as possible by taking advantage of risk management tools like stop-losses.
Final Thoughts
Forex strategies help you to develop a method for trading that minimizes risks and increases the profit potential. With a range of strategy options to choose from, it’s important to select one that best suits your knowledge, time availability, and comfort with risk.
From stop-loss orders to demo accounts, Plus500 has all of the tools you need to develop your Forex trading strategy and manage the risks, while also increasing your knowledge and ability to understand trading.
WikiJob does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.
80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. *CFD trading via Plus500’s demo account.
