Learn simple forex trading strategies

Forex is the world’s largest financial market, and has become very accessible across the world. That, along with its constant activity, makes many traders consider it the perfect starting point for learning forex trading strategies.

But it’s also overwhelming for many traders. It’s an extremely competitive market, and often, a single bad prediction can wipe away days of progress. That’s why trading strategies matter, as they allow traders to take a structured approach and avoid common pitfalls.

However, that’s another issue on its own. Beginners without sufficient trading knowledge can’t really create their own strategy, and many guides only mention broad strokes. If you tell a trader, “If you like longer trades, try position trading“, you still haven’t given them any specific guidance on what trades they should make, when they should open and close positions, or what their day-to-day should look like.

This article aims to correct that. We will present a number of simple yet effective forex strategies that traders can use to start their trading journey.

What Makes a Forex trading Strategy Simple But Effective?

So, how will these strategies differ from the broad-stroke ones traders often encounter?

• They are small-scale – Beginners shouldn’t start with massive strategies, since they are likely to make execution errors. These strategies focus on making singular trades with smart rules, which are much easier to manage.
• They are versatile – These strategies don’t depend on specific macroeconomic events or the conditions of particular currencies. As such, they work across multiple pairs, allowing traders to go for their comfort picks.
• They use minimal indicators – Traders won’t need to learn complex indicators and their relationship to each other and the underlying market.
• They have clear entry and exit rules – The strategies provide clear guidance on your actual trades, relying on data rather than quantitative measures, which makes them a practical choice for forex trading strategies.
• They include risk management – Not managing risk is the most common mistake newer (and even experienced) traders make. These strategies provide clear risk management guidelines through smart exits.

Now, here is a final note: while these strategies are effective, they don’t have a 100% success rate. Unfortunately, trading isn’t as simple as following a checklist and conquering the market. What these strategies will do, however, is give you a chance to approach the markets with more discipline and give you a solid starting point for developing your trading style further.

Understanding the Necessary Tools for forex trading strategies

While these strategies won’t involve complex concepts, traders will need to understand the basic tools needed to execute them. This includes candlesticks, patterns, support/resistance, and trendlines, all of which are essential for applying forex trading strategies effectively.

Candlesticks

The are fairly easy to understand. A green candlestick means the price went up, and a red one that the price went down. Where things get interesting is when multiple candlesticks align, forming a pattern.

Patterns

They reveal how traders are behaving. There are hundreds of them, but you don’t have to learn them all. For these forex trading strategies, breakout and reversal patterns are the most relevant.

• Pin Bar/Hammer – A long wick and short body, with a long lower wick showing buyers rejecting lower prices and an upper one meaning sellers are rejecting price raises.
• Engulfing Patterns – Candles that completely engulf the previous. Bullish ones show buying power increases, and bearish ones indicate sellers are taking over.
• Doji Candles – Identical open and close, indicating indecision and a potential reversal.

These indicators can help you locate points where you should be paying attention. Just don’t trust them blindly.

Support

This is a price point where buyers tend to step in, and resistance is the same for sellers. These are great for finding potential entries and reversal points in forex trading strategies. To find them, look for price points where prices often tend to stop moving upwards or downwards, and draw 5–20 pip zones.

Finally, trendlines help visualise trends. Markets tend to move in waves, known as uptrends and downtrends. In the former, markets form higher highs AND higher lows, and in the latter, it’s the opposite. Trendlines help you understand the strength and possible length of a trend.

To draw a trendline in an uptrend, connect two of the higher lows and extend that line into the empty space on the chart. The same with lower highs holds for downtrends. As long as prices remain on or above/below this line, the trend is strong.

Trend-Following With Moving Averages in forex trading strategies

As noted, markets tend to move in waves known as trends. Riding these waves is an effective way to capitalise on temporary movement, and this is a core idea behind many forex trading strategies. For this strategy, Moving Averages (MAs) are a crucial indicator.

• 200-period MA shows the overall trend direction
• In an uptrend, the price will be above it
• In a downtrend, the price will be below it

• 50-period MA helps time entries within the trend
• Entry rule: wait for price to pull back toward the 50 MA
• Confirmation: bullish/bearish candlestick pattern showing momentum returning
• Exit options:
• Support/resistance hit
• Previous swing high/low
• Trend weakens
• Fixed 1:2 risk-reward ratio

With this strategy, you don’t need to guess and can instead confirm the market direction and follow it. Planning exits is crucial here, so be sure to either follow the risk-reward ratio with take profits and stop losses, or keep a close eye on the trend with lines and your MAs.

Breakout Trading from Support and Resistance

Breakout trading capitalises on strong moves that often follow consolidation periods, when a trend fails to form, making it a staple in many forex trading strategies.

• Identify a clean range: price bouncing between clear support and resistance
• Entry rule:
• Buy stop above resistance
• Sell stop below support

• Confirmation: candle closes outside the range to verify real momentum
• False breakout filter: wait for another candle to retest the breakout level before entering
• Stop-loss: placed beyond the opposite side of the range
• Timeframes: 15-minute to 1-hour to avoid short-term noise but remain capable of catching smaller moves
• Works best in volatile markets
• Exit options:
• Primary exit: target the next significant support or resistance level outside the range
• Trailing stop behind each new swing to lock in profits
• Fixed 1:2 risk-reward ratio

This approach helps traders avoid early entries and catch powerful directional moves.

Pullback Trading With Fibonacci Retracements

Fibonacci levels help locate spots where prices may pause before trend continuation, and they’re widely used in forex trading strategies. Key retracement levels (38.2%, 50%, 61.8%) act as natural pullback zones. These pullbacks happen due to profit-taking and temporary contrarian trader encouragement.

• Entry rule:
• In an uptrend, wait for a retracement into the 38.2–61.8% zone
• Confluence signals:
• Pin bar
• Engulfing candle
• Support/resistance overlaps

• Stop-loss: below the recent swing low
• Take-profit: near the recent high or next structure level
• Best for: traders who like structured, rule-based setups
• Exit options:
• Target the recent swing high in an uptrend or swing low in a downtrend.
• Use Fibonacci extension levels (127.2% or 161.8%) for larger trend moves.
• Trailing stop behind higher highs/lower lows to lock in profits
• Fixed 1:2 risk-reward ratio
• Invalidation rule: exit early if price closes back below the 50% zone or forms a strong reversal pattern against your position.

This method is best for traders who like very structured trades.

Final Tip: Manage Your Risk

No matter which of these tactics you use, smart risk management is key in forex trading strategies. Calculate your position sizes so you don’t risk more than 0.5–2% of your account, depending on your account size. Always set stop losses, and take profits are highly recommended unless you’re confident you can manually follow the trend—just be careful not to miss exit points due to greed.

Most importantly, practice these tactics on a demo account before you try them on the real market. While these strategies are simple, they are by no means trivial, and can result in major losses for traders who aren’t adept at using them. However, with experience, these strategies will become comfortable and allow you to form the basis of your trading style.

Disclaimer: This information is not considered as investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.