Thursday, June 29, 2017

Forex Trading Strategies

Forex woman computerForex strategies refer to an analysis of the Forex market via which a trader can make buy or sell decisions. With the help of Forex strategies, traders know when they need to sell, buy, wait and leave any currency pair or a trade.

There are many different Forex strategies and they can be either automated or manual. Today, as the Forex market is getting more and more automated, traders are using various automated methods and almost every broker provides traders with online trading to make trades quicker and allow for further analysis.

Forex trading software has made it easier for traders to predict future currency movements, as they are provided with a range of indicators, forex charts, expert advisors and  other useful tools.

Different Forex Trading Strategies

A trader without any strategy is like a car without a steering wheel. A forex trader entering the market without a properly considered strategy in mind, will end up making a loss.

There is not a fixed set of strategies that traders consistently and regularly follow, rather every trader has his/her own types of strategies depending on the capital, preferred currency pairs, trading software, geographical location, home currency, preferred trade timings and many other variable factors.

So a strategy that works well for one trader doesn’t necessarily work equally as well for the others.

As a forex trader, you need to develop your own strategies. You need to set your own goals, priorities, rules and preferences. Although strategies keep on changing from time to time as the forex market never remains stagnant.

Below are two example Forex Trading Strategies:

Stop loss order

This is a risk minimizing strategy through which forex traders can minimize the risk involved in any particular trade, basically it stops any loss at a certain level. Traders can stop any trade at a given price to avoid any further losses. It’s a general kind of a strategy where every trader has its own limits defined to avoid loss.


Leverage is a profit maximizing strategy which is widely used by traders irrespective of their experience. In leverage trading, a trader trades with more capital than he/she has. The leverage ratio normally offered by brokers is 100:1, which means a trader can do a trade of $100 if he/she has $1 in his/her account. Leverage ratio is offered by the brokers to their traders and every broker has different leverage ratio.

Besides these general types of forex strategies, there are many other types of forex strategies which are offered with the trading software. These include forex indicators, forex charts and others. Some of the most famous forex indicator strategies include:

  • MACD Forex Strategy
  • Moving Average Strategy
  • Parabolic SAR Strategy
  • Oscillator Strategy

Some useful tips

  • No matter what forex strategy you follow, you can not become a millionaire overnight. So try to be very patient and consistent with whatever you do in the forex market.
  • Keep on switching your strategies and find ones that suit your trading style
  • Keep searching for new Forex trading strategies on the internet, business magazines and from reviews.

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