Forex trading strategies are essential for a trader. A trader should know when to be Bullish or to be Bearish. Forex trading strategies help you analyze the market and to take the last step of your analysis - to buy or sell a contract. This is the most complicated part of the whole process. Determining the time of the opening and closing of positions should be as accurate as possible.
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.
The most common Forex trading strategies are:
1. Scanning the resistance and support
Forex trading strategies include tracking the Support and Resistance levels. Break of the Resistance can become a signal for opening a long position (Buy), which can then be protected by a stop-loss order. You can place the stop-loss a little under the level of a break, which will now become the level of Support. Prices ascending up to the Resistance in a generally declining trend, as well as prices declining to the Support with a generally ascending trend can be an indication to open new positions.
2. Scanning for the intersection of 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. Scanning the breaks
Forex trading strategies, based on breaks, include 3 main options:
- 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.
- Wait for the inevitable roll-back after the break, because in the market after a break, there is usually a correction.
Forex trading strategies in this case can include a combine approach - a trader can open one position in each of the three phases. You can open a small position before the break, then buy another position immediately after the break and, finally, open an additional position at the time of a small fall in prices during the correction, following the break.
4. Trading time frames
1). Holding a long position- for days or months - (is a moderately safe one of the Forex trading strategies, based on time-frames). It is best suited for strong trends. For best results, also look at the immediate options. Since this is a long position, you should also use fundamental analysis.
2). Holding a position of a medium length - a few days (the safest of the Forex trading strategies, based on time-frames). It is also desirable to ensure yourself by looking at shorter trends. Analysis of the medium length position is more complex, but such positions are much more stable for profit. Of course you need to choose the right moment to open / close a position. Again, these positions require the use of both - technical and fundamental analysis.
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.
Sound Forex trading strategies will aid you in finding the best times for your transactions. Sound Forex trading strategies remain useful for decades. - 23309
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.
The most common Forex trading strategies are:
1. Scanning the resistance and support
Forex trading strategies include tracking the Support and Resistance levels. Break of the Resistance can become a signal for opening a long position (Buy), which can then be protected by a stop-loss order. You can place the stop-loss a little under the level of a break, which will now become the level of Support. Prices ascending up to the Resistance in a generally declining trend, as well as prices declining to the Support with a generally ascending trend can be an indication to open new positions.
2. Scanning for the intersection of 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. Scanning the breaks
Forex trading strategies, based on breaks, include 3 main options:
- 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.
- Wait for the inevitable roll-back after the break, because in the market after a break, there is usually a correction.
Forex trading strategies in this case can include a combine approach - a trader can open one position in each of the three phases. You can open a small position before the break, then buy another position immediately after the break and, finally, open an additional position at the time of a small fall in prices during the correction, following the break.
4. Trading time frames
1). Holding a long position- for days or months - (is a moderately safe one of the Forex trading strategies, based on time-frames). It is best suited for strong trends. For best results, also look at the immediate options. Since this is a long position, you should also use fundamental analysis.
2). Holding a position of a medium length - a few days (the safest of the Forex trading strategies, based on time-frames). It is also desirable to ensure yourself by looking at shorter trends. Analysis of the medium length position is more complex, but such positions are much more stable for profit. Of course you need to choose the right moment to open / close a position. Again, these positions require the use of both - technical and fundamental analysis.
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.
Sound Forex trading strategies will aid you in finding the best times for your transactions. Sound Forex trading strategies remain useful for decades. - 23309
About the Author:
About the author: Steve Maenshel has been a professional trader for ten years. He can help you understand forex trading strategies. For more forex trading information, visit his forex resource center.
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