Forex trading without effective strategies is like playing a big football match without any game plan. The team without a game plan is likely to lose and therefore a trader without any Forex trading strategy can also more likely to be unsuccessful in the long run. The main task of every Forex strategy is to reduce the effect of external factors on the trades you perform. The developments of Forex trading strategies can be compared with the development of a business plan by a businessman.
It should be understood first that any strategy is not a 100 percent success guarantee but in the long run use of effective strategies and making a mix of them and applying on the correct time gives fruitful results. Let us now go over some of the most popular trading strategies here:
Some Popular Forex Trading Strategies
Price Action- The traders trading on Price action strategy use price as a leading indicator. For them price is the only way to understand the market behavior and the movements in the market. The repeated human behavior affecting the repetitions of price patterns is the basis of this strategy.
Trend trading- This form of trading takes the basis that the currency price often moves in a trend. The trend movers take advantage when the price goes up but suffer if the price stagnates of goes down. The indicators which give the general direction of the price are highly adopted by the trend traders who use effective Forex trading strategies.
Basket trading- The correlation between different currency pairs is the basis of trade. When certain pairs move in a direction then associated currency pairs often follow the trend. This is taken as the basis of the trading done by basket traders and they make decisions based on multiple inputs. They trade multiple currencies simultaneously.
Day trading- A day trader is the trader who opens the trading positions in a day and close every position within the closing of the trading day. The basis of this type of trading is to make profits due to the fluctuations of prices occurring in a single trading day. The day trader tries to reap the benefits from the movement of the currency prices in a day. Though he needs to invest larger amounts due to small fluctuations, day trading can be profitable for both the beginners and experienced traders who engage in Forex trading at https://www.xtrade.com/.
Support/Resistance level trading- This is also termed as range trading and the trader first determines the support and resistance levels before entering into a particular trade. Then the trader opens and closes his position based on these levels.
If used consistently for a longer time, these Forex trading strategies can help in gaining considerable profits.