Forex Trading Strategies for the Best Trading Results
Forex trading strategies are essential for a trader to know exactly when to sell or buy a currency pair. The time of purchase or sale of foreign currency pairs is the most important point of a trade. The better that the trader is able to determine the time of entry / exit, the more profitable is a potential transaction. This can be achieved with sound Forex trading strategies.
Determining the exact time of entry into the market and exit from the market is defined often within minutes or hours, with the use of technical analysis tools and sound Forex trading strategies.
Main Forex trading strategies are:
1. Support and Resistance
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
Looking for the price to cross the trend line is yet another one of common Forex trading strategies. Prices crossing the lines of the trend allow a trader to enter the market or to exit the market early enough, especially when the crossing has occurred on a “proven” trend-line. However, do not forget the other indicators of technical analysis. When using the trend line as the level of Support and Resistance, long positions (Buy) should be opened on the fall of prices to the level of an upward trend, and short positions (Sell) should be opened with the rise in prices to the level of a descending trend-line.
3. Trading in the break
Three Forex trading strategies for trade at the time of breaks:
- If you think you have predicted the upcoming break, open position prior to its occurrence;
- 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;
There is also a 4th option for Forex trading strategies based on break – open position in each of the phases described above. One position – before a possible break, second position – immediately after this break and the third position should be traded in the hope of the expected price correction, which is likely to happen.
4. Choosing a suitable time frame
1). Long-term holding of open positions ranging from a few days to several months, these types of positions are maximally effective in the emerging trends and the least effective at the time of flat trends. When working on long-term positions, fundamental analysis is just as important as technical analysis. This is one of the moderately safe Forex trading strategies.
2). Medium-term trends, up to several days. Medium-term positions are more stable for profit, although the analysis for the decision-making is more complex in this case. It is also very important to choose the right time of opening and closing positions. When you open medium-term positions, be sure to not only use technical analysis but also fundamental. This is one of the safest Forex trading strategies.
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 based on technical analysis indicators will help you achieve the best results. Forex trading strategies are especially useful for choosing the right time to enter and exit the trades.
