Forex trading revolves around currency trading. The value of the currency can rise and fall as a result of different factors that include economics and geopolitics. The changes in the currency value are what factor in the profits for Forex traders and this is the main objective of getting into the trades. The trading strategies are sets of analysis used by the traders to determine whether they should sell or buy currency pairs at a given period of time.
These strategies can be technical analysis charting tools based or news based. They are made of a multiple of signals that trigger the decisions whether to buy or sell the currencies a trader is interested in. The strategies are free for use or they can also be offered at a fee and are usually developed by the Forex traders themselves.
The strategies can also be automated or manual. trading Manual systems require a trader to sit and look for signals and also interpret them so they can decide whether to sell or buy. Automated systems on the other give traders more flexibility because they can customize software to look out for specific signals and interpret them. Trading strategies may not be all that perfect in making money, but when you have a sound understanding of what they are all about, it becomes easier to adopt reliable approaches when trading in the currencies.
Forex Trading Strategy Types
There are so many strategies out there that can be used by Forex traders. The most important thing would be for the trader to decide what strategy matches the kind of trading experience they wish to have and what strategies offer the best signals for interpretation so the best trading moves can be taken. Below are some of the top strategies most traders use and some you should consider if you are a beginner in the markets.
Forex volatility strategies – The Forex market can be volatile, meaning that the prices can make very sharp jumps. Volatility systems are created to take advantage of the price actions and are usually best for short term and quick trades. The systems are also based on volatility increase and whereas their winning percentage of trades may be higher, the profits earned per trade can be comparatively low. This strategy is best for traders and investors who understand the volatility perception.
Forex trend following strategies – These strategies use market trend marketing to guide traders towards their long term trading goals. Moving average, current market price calculation and channel breakouts are commonly used to generate signals and decide the best market direction to take. Instead of predicting or forecasting prices, traders using these strategies only follow the market trend.
Forex scalping strategies – Scalping in Forex involves making multiple trades with each of the trades making small profits individually. When using the scalping strategies of trading, the profits are usually anywhere between 5 to 10 pips for each trade. These strategies require constant Forex market analysis and the trader also need to place multiple trades at once. They can be pretty demanding and traders need to be relatively fast in predicting where the markets are headed so they can open and close positions in the shortest time possible.