To be a successful forex trader, you will need to have
different trading strategies that can be applied in different situations. One
of the trading strategy you will need to have as a beginner is pricing. Even
though profits and losses are mostly affected by indicators, price also affects
them. Using pricing patterns will help you determine when to enter or exit a
trade. There are some price patterns that usually repeat themselves due to
repeated human behavior. If there is anything that hinders the view of the
price itself during trades, it is detrimental to your trading.
Another strategy that will be of great benefit in forex
trading is trend trading. Its basis is that price moves in a trend, either in
an uptrend, downtrend, or a sideways trend. It is therefore important to watch
out for the trends and take advantage of them when the price is in your favor.
The problem with trend trading is that you will not have much to do when the
price consolidates or stagnates. You will need to be highly looking after the
trends that usually cover the actual price and only give its general direction.
You can also use breakout, demand and volume trading to
maximize your profits. The basis of this strategy is that the price of trades
usually bounces out of certain levels or breaks out of a consolidation period.
You will therefore need to take advantage of the periods when the price is
favorable to you when making the trades. You will need to understand the
demand, supply, volume as well as what causes the price levels to fluctuate as
well as the indications when the bounce or breakout is about to happen. You
also need to understand which direction the bounce or breakout will go to.
Diverge trading is another strategy you can use in the forex
trading market. It is based on the fact that movement of oscillating indicators
does not follow the real price movement. There are times when the price can
make higher peaks while the indicators are recording lower peaks. Even though
these might seem like inconsistencies, they might be good trade signals. You
will need to understand the indicators since they are the ones that will help
you determine whether to enter or exit a trade.
Another trading strategy that you can use it basket trading
which relies on the tradable relations between currency pairs. Even though the
correlations may not be 100 percent consistent, when certain pairs move in a
particular direction, the associated pairs will generally follow the trend. You
will need to know how to see multiple charts at the same time when using this
strategy and then make your decisions basing on multiple inputs. You will need
to know how to trade a single currency or multiple currencies simultaneously.
Last but not least, there is the combo trading strategy.
Here, you can combine anything that you find to be working. The only problem is
that you may suffer from information overload as well as analysis paralysis due
to different signals you will be getting from different trading methods.
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