If you’re looking for a quick explanation of advanced Forex trading strategies, it’s likely that you’ve already learned about, tried, and evolved beyond the basic Forex strategies, such as:
- Scalping
- Day Trading
- Swing Trading
- Position Trading
- Carry Trading
If you aren’t yet familiar with those strategies listed above, then you’ve come too far. Go back, have a play around with those and ensure that the foundation of your knowledge is strong before you try to explore beyond it. YouTube will be your best friend right now, especially because of how visually difficult these strategies are to explain.
Ready to tackle some more technical strategies, take greater risks with your positions, and dive deeper into the masterful craft of Forex trading? The following strategies are going to provide some food for thought as you move forward in your trading journey.
The Breakdown Strategy
In the Breakdown strategy, a trader will assess market movements and see that a support level has been broken and the price is going to drop even lower. This could be related to a change in sentiment due to a recent news update. Suddenly, the price begins to drop and whenever there is a noticeable price change, there’s an opportunity to profit. Now, most beginner traders are looking to trade on price rises, but here, you’ll need to short sell the weakness in price and make money as the value of a currency drops.
Short selling involves selling currencies that you don’t actually own…
The Breakout Strategy
Not all Forex trading strategies have an equal and opposite version, but Breakout and Breakdown are exactly that. So, rather than a support level being broken, the Breakout strategy kicks in when a resistance level is broken as the price rises. This is a great opportunity to make some profit, buying positions on the way up.
Typically, a price will go up and hit a certain price where it refuses to budge, staying at this price and just below it until the trading volume pushes the price through that resistance level. If that level does get broken, the sky is the limit and nobody really knows where the trend can take it, if not, it falls and repeats the cycle. The resistance level can usually be found by looking at recent peaks and seeing if several of them hit the same price point before falling again.
The Bounce Strategy
In the Breakout strategy described above, the candlesticks hit the ceiling (resistance) and fall again before breaking out, but in the Bounce strategy, traders instead look for the floor (support). By looking at recent hours and days on the charts, traders can predict where a strong support level exists and can keep buying the currency as it bounces away from that point, making small profit margins on repeat. If you’re not careful, however, the support will break and your currency’s value will fall.
The Overbought and Oversold Strategy
Rather than looking at patterns within the price movements and candlesticks on the chart, this time you are going to be looking at the Relative Strength Index. This is a smaller bar chart that usually lives below the graph plotting the price of your foreign currency pair and it is known as an oscillator.
So, what do you do? Well, you track the RSI to see when it’s overbought, which is at around 70%, meaning the market price is typically about to fall. At the bottom end, when the RSI goes below 30%, the currency pair is oversold and the market may be able to turn back up and give traders a good indication of whether to buy or not.
Want to know some more advanced Forex trading strategies?
Here are a few more that we recommend researching:
- Triangular arbitrage strategy
- Price Action strategy
- Ichimoku Cloud strategy
- Order Block strategy
- Fibonacci strategy
- Midnight strategy
- Trend Line strategy
- Advanced Currency trading strategy
- IKH-HA strategy
- Floor Trader strategy
- Heikin-Ashi-two-bar strategy