Forex trading strategies are essential for a trader. A trader should know when to be Bullish or to be Bearish. Forex trading strategies help you analyze the market and to take the last step of your analysis – to buy or sell a contract. This is the most complicated part of the whole process. Determining the time of the opening and closing of positions should be as accurate as possible.
The decision often must be taken within a few minutes or hours, using various tools of technical analysis.
Key Forex trading strategies:
1. Using Support and Resistance levels
Sound Forex trading strategies, similar to this one, remain profitable, even though they started to be used long ago. When Resistance is broken, it can serve as a good sign to buy. This new position can be secure with the aid of a stop-loss placed directly below the level of a break. The level of a break now will become a level of support. New positions can also be opened, when in a descending trend the prices rise up to the Resistance line. New positions can also be opened, when in an uptrend the prices fall down to the Support line.
2. Prices crossing the trend lines
Most important is the intersection of a proven and several times checked trend-line, which would allow a trader to enter / exit early. At the same time, it is better to also keep an eye on other technical indicators. If you are using the trend-line as your Support / Resistance, buy when prices fall to a solid upward trend line and sell when prices rise to a solid downward trend-line. This is one of the sound Forex trading strategies.
3. Trading in the break
Forex trading strategies usually include 3 main options to trade in the break:
– Open the position prior to an anticipated break;
– If you see that the break occurred, trade for the rollback, virtually inevitable after a break.
– Open a position at the very moment of a break;
Forex trading strategies in this case can include a combine approach – a trader can open one position in each of the three phases. You can open a small position before the break, then buy another position immediately after the break and, finally, open an additional position at the time of a small fall in prices during the correction, following the break.
4. Choosing a suitable time frame
1). Holding a long position- for days or months – (is a moderately safe one of the Forex trading strategies, based on time-frames). It is best suited for strong trends. For best results, also look at the immediate options. Since this is a long position, you should also use fundamental analysis.
2). Forex trading strategies, based on medium-long positions, i.e., few days. Also analyze short-term scales. Such positions are likely the most stable for profit, but their analysis is a bit trickier. Look, as usual, for the best time for the opening / closing positions. Again, use in addition to technical analysis also the fundamental analysis, which is perfectly suited for longer timescales.
3). Short-term positions, lasting from several minutes to several hours. Pluses: there is no risk of fundamental news and the changes in prices at the time of your absence. Disadvantages: high risk of adverse movements in prices requires constant monitoring and concentration throughout the day. Basically, if a trader uses the data on a number of sellers and buyers in the market, that data will give the trader the needed information about where the market seems to go. Super-short-term trading could also be used with breaks and rollbacks. Super-short-term trading is highly risky, and thus it better suits professional traders and market-makers. This is the least safe Forex trading strategies.
Forex trading strategies are essential to find the exit / entry points. Try to constantly enrich your trading arsenal with sound Forex trading strategies
Author Steve Maenshel is a ten year veteran of the forex markets. He can help you understand forex trading strategies. For more forex trading information, visit his forex resource center.
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