Whether you’re a trading hobbyist or you have ambitions of becoming a self-sufficient trader, it stands to reason that you’d be interested in trading forex. It is the world’s largest exchange market, and as such, it offers the opportunity for remarkable profits. It can be an unforgiving market for newcomers, however, and without proper knowledge, the high risk can lead to a quickly drained portfolio. To have a chance at success, you’ll need to be familiar with some of the best forex trading strategies.
Blade Runner
This is a relatively easy strategy for traders of all levels, and can be employed at any time of day for any currency pairing. Its primary indicator is the 20 exponential moving average (EMA) on the Bollinger Band chart. This type of chart is divided into three bands. There is a middle band tracking the simple moving average (SMA) across 20 days and an upper and lower band showing the fluctuations over this period. Markets that move high toward the upper band are considered overbought, and markets moving toward the lower band are considered oversold. The 20 EMA indicator used by the Blade Runner strategy takes recent rises and falls in the market price into greater account than the SMA, which would simply average the sum prices across 20 days.
Swing trading
Swing trading is a medium-term strategy where options are held for several hours or even a few days. The goal is to profit from a significant part of each price movement. The strategy can be employed with volatile, fast moving stocks and slow moving stocks with equal effectiveness. This is one of the most popular trading options due to its ability to seek out immediate profits and its lenient time investment compared to other methods. A disadvantage of this strategy is that trade positions are vulnerable to weekend risk, meaning that significant market changes in the following week could result in serious losses.
Fibonacci sequence
This mathematical sequence is particularly popular in all forms of technical analysis. It is most frequently used in long term strategies where close analysis of trends is imperative. Fibonacci retracements are performed by taking two extreme points on a chart and marking the distance between them at specific points. Market behavior at these key points is used to predict the next trend.
Position trading
This is a long-term strategy where currencies are held for weeks or months before decisions are made. Profits are made from studying long market trends, and those using this technique are unlikely to be swayed by the news or daily changes. These traders will often study the market over periods of 200 days or longer to determine a primary trend before investing. This strategy generally requires a great amount of discipline and experience to be successful.
Day trading
This is a popular strategy often seen in the media that, as the name suggests, involves buying and selling positions within the same trading day, perhaps multiple times. It doesn’t require much capital to get started and can seem like an easy way to earn quick profits. That said, it requires extensive knowledge of the market to enable informed decisions in such a limited amount of time, and it is not considered friendly to newcomers.
For expert traders and newcomers alike, it’s hard to overvalue the advice of a broker. Brokers are experts in the market, and their success is tied directly to the trader’s. Most brokerage services offer educational materials to investors, and making more successful trades will easily pay for their services as well as yield higher profits.