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The different types of forex trading styles

After you open your Rakuten trading account, the next thing you need to find is a winning trading strategy. Forex traders make use of different trading techniques and strategies to the best forex market entry and exit points and also to determine the best time to sell or buy currencies. For this reason, market traders and strategies are always coming up with new innovative strategies which device new methods that are used to better understand the forex Australia market movements.
Here are some of the major FX trading strategies any trader can employ in their trade.

Range trading

This is a simple and popular trading strategy. It works on the belief that trade prices can hold in a predictable and steady range for a specified period of time. This idea is particularly true in forex markets that involve predictable and stable economies. It also works when trading currencies that are not necessarily affected by news events.

A range trader relies on their ability to buy and sell currency highs and lows that are highly predictable. Sometimes, they trade in these currencies repeatedly in one or a few trading sessions. Tools used by range traders to learn about trade entries and exit opportunities include commodity channel index, relative strength index and Stochastics.

Trend trading

This is a very common trading strategy in forex. In trend trading, the trader needs to identify a downward or upward trading trend in currency movement. The trader also chooses trade entry or exit points based on currency positioning price in particular trend and also the strength of the trend.

Traders who use this strategy always cite the phrase, "the trend is a friend". This works as a reminder for traders that recent trends can be relied upon to indicate potential price movements. This helps them to determine where it is best to setup trade entry or exit points.

Tools used by trend traders in trend evaluation include relative strength indicators, moving averages, Volume measurements, Stochastics and directional indices.

Momentum trading

Traders who use this strategy base their choice of trading style on the idea that price movements in a specific direction are an indicator that the price trend is likely to continue in the same direction. On the other hand, they also believe that a weak price movement in a certain direction is an indication that a trend has lost strength and is headed for a reversal. Momentum traders take into account price, volume and graphical analysis to know when it is best to trade.

Breakout trading

This is a forex Australia trading strategy where the trader identifies an entry point to a trade at a trade breakout from a former defined trading range. If a price breaks higher from a former defined resistance level, the trader can decide to buy with an expectation that the currency to move higher. On the other hand, if a trade breaks at support level within a particular range, the trader can sell aiming to buy the currency at a more favourable price range.

Retracement trading

This is a trading strategy created from the notion that trade prices between highs and lows don’t move in straight lines. Traders who use this strategy believe that process make pauses and change direction while on larger paths between resistance levels and firm, support.

With this idea, retracement traders often wait for price pullbacks or retracement for a portion of their movement as a trend confirmation before selling or buying. This is done to take advantage of a longer and better price movement in a particular direction. Retracement traders mostly pick a percentage as a sign of confirmation for optimal points of entry and exit in trades.

These are the most common and easy-to-use trade strategies. They are at the trader’s disposal to help determine possible price movements and help a trader to take advantage of a trading position. While some traders use a particular trading style exclusively, it is often a good idea to try and work different strategies at a go to come up with a hybrid version that works for your trade.

17 Sep 2018 12:47


About Boris Dzhingarov

Boris Dzhingarov graduated UNWE with a major in marketing. He is the CEO of ESBO ltd brand mentioning agency. He writes for several online sites such as,,, Boris is the founder of and