New opportunities and expectations come along with the new year. It is a good time to provide a deep analysis of last year’s trading performance and boost your trading strategy in 2022. For some investors and traders, this year can be the start of a new business associated with forex trading and investment. So does forex trading.
For this reason, we have conducted an in-depth analysis of the Forex market to find out the best forex trading strategies expected in 2022. Some upcoming and existing market trends can bring success to a trader when following a particular strategy. Some of them could be banged for many losses and risks they got participants into. So, follow the next section to be aware of current insights to provide trading with perspectives.
Promising Trends on the Forex Market in 2022
When it comes to the forex exchange market, the term “volatility” is an exact explanation of what happens regularly within the market. Positioning USD as a leader, it also suffered a bit last year. But its strength has been upheld up to the high rate of 96.95 in November compared to other currencies like EUR, AUD, and GBP.
According to experts reports, 2021 was a disaster for Sterling that was affected by the COVID-19 in the UK. It had a slight rise in the first quarter of 2021, but it reached 1.32 against USD closer to the end. It is expected that in 2022, USD will reach a closing value of 97.33. Therefore, such facts allow us to conclude that two crucial factors badly influence the strength of currency pairs. They are inflation and the impact of Covid-19 in the global scope.
Regardless of other distracting effects, some trends could make strides in 2021 and seem to be gaining more momentum in 2022.
Interactive Trading Apps
Keeping pace with technology, the forex market is updated with new high-tech solutions for traders and investors to facilitate trading engagement. The online broker and trading platforms are accessible to everyone with helpful options to carry out financial actions. We’d like to notice one worthy forex broker — Exness, which enables customers to track the market movements and provides useful technical indicators to fix the due moment to open the position and close it. The broker offers its desktop version as well as its native app to undertake your business wherever you are.
Forex Trading is Getting Younger
This tendency involves young people getting into trading due to the opportunity to access respective platforms online via devices. The modern youth is pretty tech-savvy. They are getting more familiar with the entire process of forex trading and accepting it as a way to earn extra money. So, by the time they have all chances to become experienced, young traders.
Restoring Carry Trades
This trend is considered one of the most popular and profitable among traders. They receive profit from the difference in the interest rate between a currency pair. Unfortunately, the pandemic has slowed down this activity. It is more likely to prosper in the post-Covid period and become a basis for forex traders over the world.
The Best Forex Strategies in 2022
The style and approach a person has chosen to forex trade determine such points as time, experience, and capital they are ready to invest. Accordingly, they look for strategies that suit their purposes. But not all of them are applicable to every trader. For example, novice traders will find scalping very difficult to implement and get profit because this strategy requires much knowledge and practice.
We have reviewed the market for successful and failed strategies in the past year. Also, we have analyzed their advantages and disadvantages that allowed us to choose the best five strategies that, we believe, will work out in 2022.
Breakout strategy
This strategy is directly related to a forex pair breaking out a resistance area. A trader should know when this state “breakout” comes to vision to resort to appropriate actions. It is possible to track this market movement on an analysis graph provided by many trading platforms. This occasion makes the market volatility grow. So, it is a favorable time to open a position in a respective currency pair and hold it until a trader anticipates an upward price movement. Thus, it is a sign to close a position. Thanks to this strategy, they can manage their loss risk. On the other hand, they should be consistent in monitoring the market and able to execute a trade at the right time.
Momentum strategy
This approach is much like the previous one, but traders follow the upward movement in a currency price. That is why it is called momentum, as participants notice it instantly and purchase a currency or Forex CFD at once. As soon as they define a tendency of the price fall, they should immediately close their position to avoid losing the money. In addition to the trading procedure itself, it is a good idea to learn the currency price movement in the market during the last years. So, traders can grasp the tendency of currency movements and what to expect. Also, such overall research will help traders to find out currencies with confident price movement for the most part. A momentum strategy is a good start for beginners in forex trading.
Carry trade strategy
The advantage of this strategy is in leaving a position opened overnight through broker service. They make income by getting swaps into their accounts. The main point is to earn money from the difference in the country’s interest rate under review. Thus, traders can cover the cost of buying a currency with a higher interest rate. However, despite the easiness and profitability of carry trade, participants face big risks of losing more than an initial capital when the circumstance turns to the worst for them. To apply it successfully, one should understand forex trading at large and be aware of taking benefits from interest rates.
Position strategy
If a trader prefers to invest in medium- or long-term perspectives, position trading is the perfect solution to follow. It involves opening a position for a longer period and understanding the factor that can affect the price. To execute this financial performance, one should study a wider market situation with its peculiarities and predictions in the future. This choice is typically made by investors rather than by daily traders. It is a suitable strategy for those who don’t have much time for trading activities and analyzing the market every day.
Scalping strategy
Once a trader gains appropriate knowledge and experience in forex trading, scalping is one of the methods worthy of being tried. It identifies a trade with multiple assets in a short time and when a target profit reaches its peak. A position is generally kept for about 30 minutes. To benefit from scalping, one should open many positions and track the price movement of the underlying asset — currency pair or single currency.
This strategy looks much like multitasking with several positions in one timeframe. It requires diligence and the ability to dispose of available trading tools. This approach aims to gain profit from each deal instead of focusing only on one position.
Summary
The forex market condition is volatile. This peculiarity should be taken into account when choosing a trading strategy. We have revealed the most promising strategies expected in 2022 with their performance pros and cons and the main factors influencing the market. So, you can try one by one, making an effort, and determine the most suitable and profitable for you.
Among them, there are tactics available to novice traders as well as to experienced ones. For example, breakout and momentum strategies can be considered excellent alternatives for beginners to feel trading and market at large with the help of technical tools offered by online brokers. Thus, by experiencing, learning from your own mistakes, and doing research on the forex market on a regular basis, you can achieve high goals and become a successful trader like George Soros, Stanley Druckenmiller, Bill Lipschutz, Michael Marcus, Bruce Kovner, and others. So never give up, and good luck!