The basic basis when it comes to trading in the foreign exchange market is a combination of understanding how currencies are quoted and what the exchange rates represent. In the Forex market, all currencies are quoted in pairs and Forex trading involves the simultaneously buying of one currency against another currency, which is sold.
Before we continue – Here are the best Currency Pairs for beginners to trade:
Pairs commonly recommended for a beginner traders are the EUR/GBP, USD/CAD, AUD/USD, NZD/USD and USD/CHF. These pairs are suitable for analysis plus the trends and characteristics of each pair are more visible.
This is viewed as the least volatile of all the pairs. If a traders was going to analyse the EUR/GBP pair on a daily chart in great detail they will notice that usually the daily chart doesn’t exceed more than several points, whereas in a weekly chart (W1) there are cases that the pair did not go beyond a channel of 10-20 points. It is important for traders to know that the price of this pair per pip is considerably larger and even a small movement can affect their account. This pairs trend tends to be easier to predict but a trader has to take in consideration there can be big spikes. This is a pair suitable for beginners, yet sometimes – unpredictable.
This pair in forex ‘lingo’ is referred to as the “loonie” referring to the duck that is represented on a 1 Canadian dollar coin. This pair is sensitive to changes in oil prices. This pair not known for being very volatile and is suitable for technical analysis. This pairs trends don’t always move as nicely and it could and sometimes it has unpredictable movements. It is recommended for beginners but traders are cautioned to trade this pair carefully.
And last but not least –
AUD/USD and NZD/USD
These two pairs are similar by their movements and are seen as a stable choice. In Forex lingo they are better known as the ‘Aussie’ (AUD/USD) and ‘Kiwi’ (NZD/USD). These pairs are suitable for technical analysis because they are slow and calm in movement. The dollars of Australia and New Zealand are sensitive to both metal prices and weather conditions in Australia and when there are severe weather conditions including drought, fire, floods, and hurricanes in Australia, and when metal prices are falling, the AUD/USD and NZD/USD usually decline. However, traders should note that it is not affected when the weather conditions are good.
For traders who are only starting out it is very important to invest a significant amount of time in searching for trading training courses, beginner’s trading guides, lectures, videos and various other types of educational materials, which is luckily readably available online from a large selection of brokers and online educational institutions.
Our picks for the best forex courses include:
“Forex Trading A-Z” from Udemy
Perfect for: Beginner to advanced traders
“Forex Trading A-Z” is an in-depth course which teaches traders the complete ins and outs of the entire forex market, including how to trade and make money off currency movements.
Brooks Forex Trading Course
Perfect for: Beginner to intermediate traders
Through this course, traders will learn price action trading taught by industry expert and professional trader Dr. Al Brooks in this Brooks trading course. The Brooks Trading Course is the most comprehensive source of information on reading and trading price charts.
Platinum Trading Academy
Perfect for: Beginner to professional
PTA offers traders a wealth of trading tools, blog posts and video lessons available for free!
Forex School Online
Perfect for: Beginner to intermediate traders
As the name suggests, Forex School Online is a website which helps students understand the basics of the forex trading market available through two courses.
Those new to the trade will need to use the knowledge they obtain to develop early trading strategies and draw meaningful conclusions for future reference.
There are multiple trading techniques and trading tactics involved in the Forex market this can and surely will confuse those new to the trade. In this we introduce beginners to some key forex strategies which traders can use for their initial steps in the market.
Just some clarity before we get stuck into strategies –
A Strategy: A Strategy is a technique which is studied in detail and has been developed to achieve clear targets.
A Tactic: A Tactic is only one technique that is used to achieve a result in the short term.
What are the best strategies for beginners?
The Trend Following strategy is fundamentally essential to beginners as it is very simple and easy to understand and master. The basic idea behind this strategy is that traders keep an eye on the trend and open their position in the direction of the trend. Traders need to decide if they want a long-term or a short-term strategy which in turn will give them an idea of what type of charts to make use of.
Market trends are usually long, medium or short-term.
The Trend Following strategy requires a close observation of charts and patterns for even the slightest change. A trader will in turn benefit from the “ups and downs” of the financial markets, following the trend without a need to predict or calculate.
Use of Trend Lines
Trend Lines are one of the most effective and easy to master concepts that will help beginners in trading. Traders draw a straight line that connects two different points on a chart – connecting prices together. The Trend Line gives the trader a rough idea of the direction where the value of an investment might move. If a trader can learn how to draw trend lines on their own charts, this may further increase their chances of making a successful trade. So, If the trend is down, the trader would draw the line over the chart and if the trend line gets broken, that would immediately indicate that the trend is changing. Easy!
Breakouts are seen as an excellent indicator for traders as when they occur, they are usually seen as a signal which shows that a new upward trend is beginning. A breakout will happen when a market moves in a new direction, beyond the support and resistance indicators. Traders must keep in mind that the participants are the ones who define these levels, showcasing the supply and demand, which can change rapidly.
Not every breakout will result in a new trend, but – it is still a good trading opportunity for traders to be in the right place at the right time and enter an emerging trend in the early stages.
The Momentum strategy is especially popular with beginners as it is basically a technique in which traders can buy or sell currencies, based on recent price trends. Easy! Through this, traders can determine how likely it is for a trade to turn out being profitable. The Momentum strategy is determined by aspects like trading volume or the rate in which price changes and if an asset price moves strongly in a certain direction, a trader will in essence bet that this price will keep moving in that direction.
Daily Fibonacci Pivot Trade
The Bark (meaning the name) is much worse than the bite – the strategy and it is not as confusing as it sounds. This strategy uses the Fibonacci retracements as a basis, combined with the daily, (weekly or monthly) pivot levels.
Simple Moving Average Crossover (SMA)
The Simple Moving Average Crossover (SMA) strategy is another strategy that is great for beginners and traders can identify trend direction and can use it to also set up buy and sell signals. The SMA takes older data from a set period of time to showcase the average price of a financial instrument.
Bolly Band Bounce Trade
The Bolly Band Bounce Trade strategy is suitable for the ranging market and is a very good way to cope with the restricted range of price movements. The Bolly Band Bounce Trade strategy forms a limit around the short-term price movement.
Forex Dual Stochastic Trade
The Forex Dual Stochastic Trade Strategy assists traders by giving them an indication when a price might be trending but it’s overextended and traders should change their position on that particular asset. This is a strategy which might look rather simple at first glance – however, beginners need to first obtain some technical analysis knowledge before taking this strategy on.
The Bladerunner Reversal
The Bladerunner Reversal strategy is widely-considered as one of the most effective forex trading strategies but yet again – it does require a certain level of experience to use. The Bladerunner Reversal strategy is a price action strategy which aims to spot the most favourable entry points in a certain trade and is a strategy that is suitable across any currency pair.
Next on the list we take a look at Day Trading Strategies perfect for Beginners –
How to Test A Forex Trading System
The fastest way to test a system is to find a charting software package where a trader can go back in time and move the chart forward one candle at a time. When a trader moves their chart forward one candle at a time, they can follow their trading system rules and make their trades accordingly. Traders must record their trading record, and be honest with themselves at all times – Record wins, losses, average win, and average loss.
The next step will be – Trade a system live on a demo account for at least two months. This will give traders a feel for their system when the market is moving. After two months of trading live on a demo account, traders will see if their system can truly stand its ground. If a system brings good results, traders can choose to trade their system live on a real account.
Here is a summary of the Top 3 best forex brokers for beginner forex traders.
Plus500 is a trusted globally recognized brand with a user-friendly platform on offer. Plus500 is a good choice for beginner traders as it is generally reported to be a user-friendly broker by its clients and the company offers an educational section called the Trader’s Guide, which includes videos that can help traders get started. Plus500 also offers a comprehensive Risk Management section which explains to traders how to best mitigate their risks while trading.
Is Plus500 Safe?
Plus500 is considered low-risk, and is publicly traded but does not operate a bank.
- Considered as a safe broker to trade forex and CFDs with.
Plus500 offers 2033 CFDs, together with on 50 currency pairs, which is a touch higher than most forex brokers.
Commissions & Fees
Plus500 has a minimum deposit of €100 and does not offer any discounts to active traders or VIP clients.
Platforms & Tools
The Plus500 platform is available for desktop, web, and mobile; but, MetaTrader is not offered. Plus500’s flagship platform includes:
- The Plus500 WebTrader (browser-based) platform is perfect for beginners and both the desktop and web-based versions focus on simplicity.
- The Plus500 WebTrader platform offers robust charting with over 100 optional technical indicators plus the ability to save chart templates.
The Plus500 mobile app is similar to the web and desktop versions, consistent in both look and feel.
Swissquote is best suited for traders who require a multi-asset solution and offers beginner traders easy-to understand and professional trading educational videos, eBooks, webinars and tutorials.
The educational tools on offer include:
- Tutorial videos for the platforms
- Forex learning centre with educational videos, eBooks
- Webinars and seminars
Is Swissquote Safe?
Swissquote is considered low-risk, and is a publicly traded company, operates a regulated bank, and is authorised by four tier-1 regulators (high trust), one tier-2 regulator (average trust), and no tier-3 regulators (low trust).
Swissquote offers trading of underlying cryptocurrencies (non-CFDs), including bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Ripple. Swissquote clients can trade ten cryptocurrency pairs from within the Trading account.
Commissions & Fees
The commissions and spreads from Swissquote’s UK entity, Swissquote Ltd, differ slightly from its Switzerland entity, Swissquote Bank Ltd.
UK entity: At Swissquote’s UK entity, if an active trader deposits at least $10,000, the Elite account is available. It comes with a commission of 5 EUR (2.5 per side) per Round-Turn (RT) trade, in addition to low prevailing spreads.
Account comparison: A Standard, Premium, and Prime (Elite in the UK) account are offered at both Swissquote’s UK and Swiss entity.
Platforms & Tools
Proprietary platform suite: Advanced Trader (desktop and web versions
Full MetaTrader suite: (MT4 desktop, MT4 web, and MT5)
Advanced Trader web: The web-based version of Advanced Trader requires flash, making it unsupported in most major browsers.
Advanced Trader desktop: The desktop version of Advanced Trader, features 49 indicators (17 overlays and 32 studies) alongside 16 drawing tools and integrated chart patterns. The platform is Java-based.
Swissquote provides an industry standard offering – streaming news headlines, economic calendar, blog commentary and more.
Tailored products and content: Swissquote’s research team helps structure some products, such as the exchange-traded certificate for crypto. Swissquote also provides analysis and market commentary and publishes a high-quality, bi-monthly magazine.
Third-party tools: Swissquote offers traders access to Trading Central and AutoChartist.
Average Connection Time: <1 minute
Average Net Promoter Score: 7.3 / 10
Average Professionalism Score: 7.2 / 10
Overall Score: 7.67 / 10
Ranking: 13th of 22 brokers
Swissquote’s Advanced Trader mobile app is easy and straight-forward to use but, for traders who prefer not to use Swissquote’s mobile app, MetaTrader is available.
Pepperstone was founded in 2010 in Melbourne, and processes, on average, $12.55 billion of trades each day (October 2019) and is best known for its extensive selection of third-party trading platforms. Pepperstone provides forex and CFD traders competitive pricing, outstanding customer service, and one of the largest selections of third-party platforms available. Pepperstone also offers a small set of tradeable products but.
Pepperstone offers beginner traders a selection of great educational materials and traders can make use of demo accounts, participate in webinars and read educational content.
With Pepperstone, traders can learn in the following ways:
- Demo Account
- Platform tutorial videos
- Quality educational articles
- Trading Glossary
Is Pepperstone Safe?
Pepperstone is measured as average-risk and is not publicly traded and does not operate a bank. Pepperstone is authorised by:
- Two tier-1 regulators
- Zero tier-2 regulators
- Zero tier-3 regulators
Pepperstone is authorised by the following tier-1 regulators: Australian Securities & Investment Commission (ASIC) and the Financial Conduct Authority (FCA).
Commissions & Fees
Pepperstone is an agency-execution broker and offers a decent range of options on pricing plans, with its commission-based Razor Account being the top choice.
Pepperstone offers two pricing models which are dependent on the account type the user wishes to open, ranging from:
The Standard Account: Which incorporates commissions into the prevailing spreads. Fees may also slightly vary, depending on the platform the user choose to trade. The standard account is commission-free but has higher spreads and is not as competitive as the Razor Account.
Razor Account: The Razor Account can be used with either the MetaTrader (MT4) or cTrader platforms and follows a commission-based pricing structure in addition to prevailing spreads.
Active traders: Pepperstone’s active trader program offers discounts on the appropriate commission rates which helps to boost its ranking in the active trader category.
- A minimum amount of 200 lots is required to qualify for the lowest tier
- A rebate of $1.00 per standard lot
- Applies only to Razor accounts.
Order-Routing: Pepperstone uses its EDGE infrastructure to help bridge the MetaTrader platform with liquidity providers and incorporates its Pepperstone Price Improvement (PPI) technology to help improve execution rates.
Platforms & Tools
Pepperstone offers an excellent third-party platform.
- Platforms: Pepperstone offers the full MetaTrader and cTrader suites which includes a MT4 (desktop and web), MT4 Multi-terminal, MT5, cTrader (desktop and web), and cAlgo. Traders can use either account type, Razor, or Standard, with any platform.
Copy trading: Pepperstone offers
- The MirrorTrader and RoboX platform from Tradency
- The ZuluTrade platform
- MyFxbook for MT4
cTrader vs MT4: Both cTrader and MT4 support algorithmic trading, cTrader has an advantage with its web-based platform.
Broad range of third-party social copy-trading platforms and research tools:
- Third-party tools:Pepperstone offers traders access to AutoChartist, which is a well-known, popular software provider of automated pattern recognition and trading signals.
- Smart Trader Tools are also offered by Pepperstone which included an MT4 add-on with tools such as sentiment indicators.
- Market analysis: Pepperstone offers content from third-party analysts. Trading Economics, a provider of market data, powers the firm’s economic calendar.
- In-house commentary: Pepperstone’s in-house research offers content such as “Daily Fix” and a “Chart of the Day” series.
- Average Connection Time:<1 minute
- Average Net Promoter Score:9 / 10
- Average Professionalism Score:5 / 10
- Overall Score:42 / 10
- Ranking:4th of 22 brokers
While there are multiple methods of trading, the strategies mentioned above have been tried and tested and has an excellent track record. While different strategies do exist, traders need to assess them and find which works best for them as an individual, as with platforms, tools and broker choice.
When a trader picks a strategy to trade with, they should not only do so by considering their level of knowledge in forex but also by doing their own market research. The strategies we have listed can be good for beginners, and professionals alike. Traders should always start off with the basics, as with any other new undertaking. Keep in mind – everything might seem simple to start, but never underestimate the market and learn each step carefully.
Frequently Asked Questions
What are strategies in forex trading?
A technique that is used by a trader to determine whether to buy or to sell a currency pair at any given time.
What are forex trading strategies based on?
On technical analysis or on fundamental news-based events.
What are the best forex trading strategies for beginners?
Here is a list with descriptions of the Best Beginners Forex Trading Strategies
Which timeframe is the best for forex trading?
Some traders are most comfortable trading 1-hour charts because it is longer, but not too long and the trade signals are fewer but not too few. This time frame give them enough time to analyze the market without feeling rushed.
Is Swissquote suited for beginner traders?
It is best suited for those traders that require a multi-asset solution. Swissquote offer beginner trader’s easy-to-understand educations tools such as webinars, videos, eBooks and tutorials.