The most important forex strategies

To trade wisely, you should use the Forex strategies appropriate to your skills and level of experience.

Forex strategies are the backbone of any trader’s success. Trading the forex market without a strategy would be like embarking on a journey of exploration without knowing the way around.

Forex trading strategies are techniques that determine how profitable it is to buy or sell a specific currency pair at a given time.

Before setting up a strategy, you must familiarize yourself with the specific conditions in the market and search for a reliable broker.

The choice of Forex strategies sometimes is conditional on the broker you choose. Depending on the brokerage firm you choose, you will see your options, the extent of flexibility, and the limitations that exist.

Most Popular Forex Strategies

Scalping strategy

A strategy in which traders try to make a profit with short trades of a few minutes duration. A trader seeks to profit from the difference between the bid and ask price.

The winnings are minimal, from 5 to 10 pips per transaction, so scalping involves opening a more significant number of short-term transactions (in some cases, up to 100 transactions per day).

The price in the forex market is unstable and constantly fluctuates. The trader relies on a short position and will not necessarily be interested in market trends, political or economic events. It will seek to benefit from the slightest fluctuation in prices.

How do you know if a scalping strategy is right for you? Although it can be profitable, it is not an easy strategy at all. It requires a lot of effort and specific resistance to stress. If you want to follow the charts, analyze the market situation as a whole, and rapid changes cause discomfort, this strategy is probably not for you.

Forex StrategiesSwing strategy

Unlike scalping, a swing strategy allows you to hold a position open for days or even weeks. You will be interested in having a significant market movement to bring in profit. Hence, you get benefits from bullish or bearish fluctuations.

It is essential to follow the way the price moves and use technical analysis to predict market movements.

How exactly can you do this? One of the technical analysis tools is the Relative Strength Index (RSI), which allows you to assess market prospects, opportunities, price developments, and develop future trends. It is a tool that can be used for many strategies, not just swing, as it gives you information about the intensity of market moves, which you can then use to your advantage.

Forex StrategiesTrading positions

This is a long-term strategy that allows you to maintain an open position for weeks or even months. Profit is generated from major market movements.

As with the swing strategy, trading positions is less stressful and time-consuming. However, to make a profit, you need to know the movement of prices and the market as a whole and more capital.

Since we are talking about a long-term strategy, the number of transactions is much smaller, and there is a risk that you will not profit each year.

Day trading

It consists of a set of day trading strategies that involve opening and closing a deal on the same day. It is also a short-term strategy, as transactions are kept open for a few minutes or hours.

As a trader applying this strategy, you will be interested in catching intraday volatility.

As with speculation, knowledge of key long-term trends is not a direct concern. The focus is on tracking quotas and transferring assets throughout the day.

As an intraday trader, you can open and close multiple transactions on the same day at your convenience. Of course, it will need more attention and patience. Profit opportunities can be great, especially if the market moves in your favor.

A disadvantage of this strategy is that it involves a higher degree of risk as you may lose a large amount of money in a relatively short time. They can also be more expensive and time-consuming, as you should always check the charts before opening a new transaction.

Hierarchical trading strategy

It is one of the trading methods that allow you to increase your chances of winning with the slightest degree of risk. It can have a negative connotation among traders, but it is successful if used correctly.

With the pyramid technique, you will continue to add profitable trades as the price or the market moves in your favor. When a position shows signs of growth, you place a stop-loss order to protect your profits when adding another position. Consequently, the risk of the trade remains the same or diminishes when you “block” the profit.

It is important to remember that not every transaction meets the requirements for pyramid trading. Only a few of them can make a profit and only if used correctly.

How do you know the strategy that suits you?

Finding a trading strategy in a volatile market like Forex is no easy task, especially if you start.

The traders who receive the most profit attribute their success to the effective forex strategies they use.

There are a few things to keep in mind before starting:

  • Find a reliable, tested, and pre-used strategy that has helped others advance in trading.
  • Any strategy involves some degree of risk. Before you give up on a strategy, be sure to test it long enough.
  • No strategy can guarantee absolute success.
  • Discipline is following the rules of strategy is vital if you want to be successful.
  • The most valuable strategies are those that suit your trading style.

Vinkmag ad

د. مرهف العطاسي

Read Previous

Dogecoin: A crypto that worth billions of dollars

Read Next

Best digital currencies to invest in 2021

Leave a Reply

Your email address will not be published. Required fields are marked *