Discipline and Analysis, The Basics of Successful Forex Trading Strategies

Click Here to Submit Your Article

Forex trading, acronym of Foreign Exchange is all about trading on the on foreign currencies for making a profit while the exchange rate of the bought currency increases vis-a-vis the currency intended to be sold. To be successful in fx trading, one has to maintain discipline in adopting a particular trading method. It is one facet of the forex trading plan for entry signals. Other aspects are i) risk management, ii) Position Sizing and ii) How to exit a trade.

Of the so many forex trading strategies, the one that suits a particular person and his style of trading gives the best return on the investment (ROI). It calls for experimentation for assessing the most suitable to a particular individual. The forex trading platforms, coming in the shape of software can disseminate proper guidance on how to trade forex.

STYLES

  1. Scalping

The trader uses trick chart given in forex trading platform, Metatrader 4 and holds the bid for few minutes and skims a few points of profit before closing

  1. Day Trading

The trader works on price bars and charts, remains for a few hours and exits before the end of the day so that the adverse effect that may creep in overnight does not affect him adversely

  1. Swing Trading

The trader looks at the bars, every hour or half hour and holds the bid for several days so as to make a margin from the short-term p[rice pattern.

  1. Positional Trading

The trader looks at the end of the day charts and waits for a long term major shifts in the value of the currency that he holds.

****YSIS AND TRADING TYPES

  1. Fundamental ****ysis

It involves ****ysis of inflows and outflows of a currency in an economy, published by Central Bank of a country and forex market news and assesses the future trade and investment trends.

  1. Technical ****ysis

Based on the theory of supply and demand, it involves reviewing of the past and the latest behavior of the currency price trends, exhibited on charts, for determining the forward movement.

  1. Range Trades

It is based on the belief that prices will hold within a given and predictable period of time, particularly for currencies that are not subjected to surprise news.

  1. Swing Trades

It involves medium-term trading over a day or a week and swings to lows or highs over longer periods. It filters out the noise or erratic movements.

  1. Breakout Trades

In case the price breaks at higher level, compared to the earlier one on a chart, entry is made with the expectation that the currency will continue its higher movement.

  1. Retracement

Here the concept is prices never moves in perfect straight lines, between the highs and lows; rather make a pause and change in their direction of the mid-path of firm support and resistance levels.

  1. Reversal Trading

This is when a trader expects a reversal in a price trend and enters into the trade, ahead of the market. Although risky, it is rewarding and can be supported by volume indicators, momentum, visual cues and charts like head-and-shoulder-bottoms and triple-top-bottoms.

  1. Position Trades

It is a long-term strategy that may cover weeks, months or even years and is based on macro-economic trends of different economies. The traders operate on lower levels of leverage and smaller sizes of trade.

  1. Carry Trade

It takes into account, the difference between the rates of interest of countries prevalent in the traded countries.

10. Pivot Points

It takes into account the resistance and the support levels on the basis of an average of the low, high and closing prices of previous session.Discipline and ****ysis take a forex trader, a long way in achieve his or her desired objective of profit and should therefore be pursued religiously.

Category: