One of the most important aspects of forex trading is to identify a successful forex trading strategy. A forex trading strategy gives a trader an insight into when and where to sell or buy a currency pair. There are different trading strategies designed by various types of traders that could be helpful for you to make large profits.
However, every trader needs to find a strategy that suits their investment capital and their risk tolerance. A good forex trading strategy is one that allows the trader to analyze the market and execute trades with efficiently managing risks.
Below we have mentioned the best forex trading strategies to help you find your ideal fit.
- Trend Trading
Trend trading is the simplest and most reliable forex trading strategy. As the name suggests, such a type of strategy involves trading based on the direction of the current pricing trend.
If you want to adopt trend trading strategy, you first need to identify the overarching trend direction, its strength and duration. All these factors will tell you how strong the current trend is and when the market reversal is expected.
However, in a trend trading strategy, you do not need to know the exact timing or direction of the reversal you simply need to aware of when to exit your current position to limit losses and lock in profits
- Position Trading
Position trading is a long term trading strategy. This is a strategy in which a trader holds his position over an extended period of time. The time can range from a couple of weeks to a couple of years.
Position trading approach requires traders to keep in mind a macro view of the market and sustain small market ups and downs that counter their position.
Forex scalping is a trading strategy that focuses on smaller market movements. This is a popular strategy that involves opening of a large number of trades in a bid to return small profits per each. This approach results in the generation of larger numbers of smaller gains.
Scalping is considered as the best forex trading strategy due to its volatility and liquidity.
A disadvantage of scalping is that a trader cannot afford to stay too long in the trade. Moreover, this approach requires a lot of time and attention because you need to continuously analyze charts in order to search for new trading opportunities.
- Day Trading
Day trading is a strategy to trade currencies in a single trading day. This strategy is not only applicable in forex but in all other financial markets and is one of the best trading strategies.
This approach suggests a trader to open and close all trades within one day. Day trading strategy advises that no position should keep open whole light to minimize the risk.
Day traders usually use 30-minutes and 1-hour timeframes in order to generate trading ideas.
If you want to get an extra bonus with your trade profit, the xm bonus referral program will be very helpful for you. Just click the link and take the advantage.