There are many strategies you can follow when investing in forex and trading the currency markets. Some of these strategies are long-term, some are short-term. Some are based on following trending markets, whereas others are more geared towards taking advantage of support and resistance points.

Whichever method you follow to invest in forex, it is always a good idea to decide upon a strategy for a particular market and stick with it. Chopping and changing between strategies is never a particularly good idea, because one of the key elements to being a successful forex trader is discipline, and it is not easy to trade with discipline if your trading strategy is constantly changing.

According to the financial website Voices in Finance, it is better not to trade at all than to attempt to fit a strategy around a market that does not present clear signals to open or close a trade. So you have been warned!

In terms of the actual strategies you can use, if the market is trending one of the simplest and most effective strategies is the moving average crossover. This is where you follow two moving averages, for example a 5-day average and a 10-day average. When the two cross, it is a clear signal to trade.

If the market is not tranding, a more effective strategy is to identify support and resistance levels using a technical indicator like stochastics for example, and to buy when the price is near the support level and sell near the resistance level.

The key is of course understanding when the market is trending and when it isn’t. This comes with experience, so the longer you trade the more likely you are to recognize these patterns.

Our best piece of advice? If in doubt, don’t trade! Only trade when your strategic signals are clear. Good luck!