Blogs Gurutrade

6 commonly-used trading strategies for Forex market

Forex trading as it may seem at first glance looks like a relatively easy way to make quick profits, but it is not entirely true. The world of Forex can be difficult, confusing and at times merciless, and any professional trader will confirm this to you.

But everything complicated can become a bit more intelligible when choosing the right approach to Forex market trading due to the right strategy. Trade strategy will mainly depend on one’s skill level, total of investments and risk attitude. It doesn’t matter what status you have, don’t underestimate the importance of strategy.

Regardless of what currency you trade more, you will encounter a highly competitive market that will gush forth with ever-changing prices, payouts, commissions and spreads. A pre-tested and adjusting trade strategy plays a crucial role for those who want to thrive in the world of Forex.

Whatever strategy you choose, be sure to test it first before applying in your work. This can be done on a demo account to which an online broker should provide you access. Do not risk trading immediately with real money, otherwise any first funds loss may take the wind out of sails and discourage any desire to trade further.

strategies that work david b

Range Trading

From the standpoint of ease, range trading is probably one of the most wide spread strategies.The key principles of this strategy working are the determination of price levels, resistance and support highs and lows in one or more sessions. This strategy is also called a variation in the strategy of returning to the average value or investing in value. So, in other words, we are talking about trading in the flat market, the price will move up and down, but in a narrow range, or channel, without reaching minimums and maximums.

News releases trading 

Forex trading based on news needs an analysis anyway since even news of similar content do not always cause the same reaction. Thus, at least several important economic news may come out per day; as a rule, news like regulators' speeches, central banks meetings, monetary policy changes, key rates shifting, employment rate, political and military events play an important role in stock quotes changing.

Those who want to trade successfully through the news should keep in mind that not only one specific news and quotation changes are analyzed at a similar event in the past, but also a confluence of factors before the opening of the transaction. So, the news on a particular company will set in motion the value of its shares, and it is quite possible that they will influence the stock prices somehow from the same sector. A message on a certain sector, or market comes back around on the movement of a group of shares. So, collect information, analyze and add strategic moves to trade in your own financial market awareness piggy bank.

Swing trading

When the trend line is infringed, swing traders, as a rule, enter the Forex stage. Swing trading involves the transfer of positions for more than 24 hours. Having successfully entered a position, a trader can remain there for 2-3 days, until the desired price movement is achieved, in order to “get out nicely”, until the rate turns into a trend. In this trade option, wider stop losses are used, without focusing on rapid position changes. It is important to note that there is also the effect of correlating instruments, both direct and inverse in Forex swing trading. For example, the price of one financial instrument grows, and the other dips, and vice versa, when we see an inverse correlation. In the case when the price fall of one instrument is accompanied by increases of another, the closer the correlation indicator approaches 100 percent.

strategies that work david b 0809

Scalping

The word “scalping” it’s a mixed bag of something unpleasant, negative, but all this has absolutely nothing to do with the world of Forex. This is just a highly profitable way to trade for short periods of time. Any strategy has its pros and cons, which one would like to mention here. The positive factors include the possibility of obtaining high profits, a short sell position and the choice of a convenient time for scalping. Among the minuses, perhaps, one can mention large risks, because the market entry is often accompanied by large volumes, whereas the stop-loss are several times higher than the level of take profit. To obtain high profits, considered as an advantage, one needs a correspondingly large deposit to enter the market in order to earn a lot and quickly. Scalping in the Forex market is limited in the choice of currency pairs, because it requires the smallest spread, which is the case for such pairs as pound-dollar, euro-dollar, while the cross-pairs can block your profit with their spread.

Scalping involves brief stints of trade when a large number of transactions are concluded in a very short time to reach a profitable mark. A trading terminal will help you with indicators, which will guide you to navigate and track the time of purchase and sale of selected positions.

Since typical scalpers quickly close positions, earning on a small price difference, so they are interested in the flow of transactions increase, and this requires a more liquid market. If swing traders look for more chaotic trading, where there are sudden price fluctuations, then active scalping traders need a calmer market that is not subject to sharp fluctuations, because they can repeat trades at the same prices.

Position trading

This type of Forex trading involves opening and holding a position for a certain period of time, from several days to even several months, in direct proportion to the developing trend. This type of trading is based on long-term analytics, determination of value highs and lows of the selected asset and further movement towards lowering or raising and the desire to make money on any of these shifts.

Day trading

The trading strategy, which involves a position opening, without saving it for a night period, with closing on the same day is called daily trading. In fact, day trading was regarded earlier as an advanced trading method that was available to professional traders and investment professionals, but electronic trading and various tools make it possible for this type of strategy to be used by novice traders.

Whatever strategy you choose, the main thing is to follow the sequence of actions, taking into account all its features, because only this scenario works keeping your concentration at the proper level. Do not jump in the midst of the action of one strategy, to another, without having studied the mechanism of action of such a method on a trial terminal. 

It is essential not to trade immediately with real capital and investments. Take sufficient time to practice on a demo account, access to which any broker can offer. You can choose a broker here, but if you have already a proven broker, impeccable reputation and good reviews in terms of a long-term cooperation, contact this brokerage company.

Photo: Pixabay


To leave a comment you must or Join us

  • avatar-1195
    FilthyRich
    • #

    Very useful information, thanks for sharing. As for me, I prefer scalping, when you understand the algorithm the success will be just round the corner.


By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree