The previous post was about forex day trading strategies in particular. This one will deal with more general forex trading strategies.
The forex market is an especially volatile one, and so strategy is of the utmost importance here. There are no “magic tricks’ involved in forex trading strategies. The success or failure of a given approach depends on the particular individual who is doing the trading as well as on the strategy itself, such that a trader who has not sufficiently mastered self-discipline and emotional control is almost certain to lose more often than win, no matter how sound a strategy he uses. The following forex trading strategies are primarily for beginners; new ones can be learned as one gains in experience.
Currency analysis is one of the most sound forex trading strategies. It can be done in two ways — technical and fundamental. Technical analysis means figuring trends and measuring currency price volatility by a study of currency pair prices. Fundamental analysis, on the other hand, requires looking at outside factors such as the political and economic situation of the country in whose currency one is investing.
Support and resistance levels
This ranks among the easiest forex trading strategies to learn. The price fluctuations for any day or week remain fairly constant, and these serve as the investor’s “trading signals,’ with the maximum value being the “resistance price,’ the value at which is is best to cash in on one’s profits. It is easy to reap large profits through this method.
More advanced forex trading strategies
The forex trading strategies that we have discussed so far are for the beginner. This section is devoted to forex trading strategies for the investor who has gained considerable experience in the area. The trading position should be kept open until the investor reaches 100 pips, with orders and stops being adjusted according to the previous candle until midnight.
On most occasions, the investor will not find candle sizes to be the same for two days in a row. The prices move steadily in either direction on large time frames, with “noise” being present, for the most part, only on smaller ones. This strategy is called midnight setup because the investor enters at midnight — his or her local time, naturally — and finds the lowest and highest prices on the candle for the previous day, remaining in the trade for the remainder of the present day.
Mathematics aficionados are familiar with the Fibonacci series in which each number is formed by adding the previous two. Now, among the most effective forex trading strategies is “Fibonacci trading,” whereby one applies the principles of the series to the forex price closest to the current wave ranging over 100 pips, regardless of whether it is increasing or decreasing.
All of the forex trading strategies discussed in this blog post require three important traits: discipline, passion and persistence. Finally, it must be acknowledged that there is no way to “get rich overnight’ when investing in foreign currency. There is a fourth trait — patience — involved in forex trading strategies, and it must be mastered.