Forex Trading Strategy
Success on the currency exchange can bring sizeable returns. The dynamics of rates let players gain from carefully timed operations. But how should you go about planning? Although values of currencies are affected by a host of micro- and macroeconomic factors, trading should not be random. There are several schemes applied by pros. Here is how to pick a Forex trading strategy that works for you.
Planning Is Mandatory
Never disregard the importance of careful planning. Financial markets are where the danger of rash decisions is particularly obvious. Be it currencies or stocks, traders ought to evaluate the circumstances and act accordingly. Even though your gut feeling could help you do well, the results will hardly be consistent.
Forex trading veterans succeed owing to their experience and foresight. The longer you practice, the better your skills. One of the realms of human existence where knowledge is monetized, Forex is a viable way to boost income.
If you are only beginning to grasp the basics of currency exchange, allocate time for training. Demo accounts provided by brokers like FXTM unlock all the functions of trading platforms with zero risks involved. Practice analysing the graphs, opening trades, and setting stop order limits.
Styles vs. Strategies
Any discussion of finance strategies in the UK should begin with an overview of possible styles. Personal preferences determine the way traders approach their activity. Here are the top four.
1. Day Trading Style
This scheme is perfect for rookies, as it is among the least complicated ones. The key idea is to exit the trade before the exchange gets closed for the day. If any drastic changes occur overnight, your funds will remain unharmed.
2. Scalping Style
In this arrangement, trades have to be very short, sometimes lasting minutes. The goal is to benefit from quickly beating the spread between the Bid and Ask. This could bring points while the trade is open. The style is particularly risky and is therefore extreme. Besides, you will need to keep an eye on the trends all day long.
3. Position Style
If self-discipline is your strength, try the position approach. Reliant on long-term dynamics, it is used by the weathered ones. Experienced traders often earn significant profits owing to big value shifts. After investing in an asset, they wait for an upward trend and use fundamental analysis and technical aids for better decision-making.
4. Swing Style
This style will require you to check the dynamics twice an hour. Focus and concentration can help you identify short-term shifts. In terms of time, the scheme is between day trading and position trading. Most often, it is used for markets with high volatility.
Basic Strategies to Consider
Try these strategies in the demo mode to see which is best for you. Since live trading carries financial risks, practice them safely to grasp the logic.
1. The Bladerunner
The strategy is popular with rookies and veterans of the exchange. Based on the exponential moving average (EMA), it determines the most likely movement of prices by splitting them in half.
2. Fibonacci (Daily Pivot)
You have probably heard of the famous numerical sequence. Here, it is applied to price charts in addition to pivot points to forecast rates.
3. Fibonacci (Overlapping)
Basically, the sequence is mapped over the same trend at different points with the goal of spotting confluences. The method helps identify areas of support and resistance, especially in case of strong trends.
4. Bolly Band Bounce Trade
Here, traders look for regularities and patterns. Best suited for a steady market, the approach is based on the principle that values return to their mean average.
These are just a few of the many strategies devised to date. Head to the broker’s website for a detailed explanation of these and other possible approaches. This applies to any tradable assets, from currencies to stocks to commodities. Build on the experience of other traders to improve your own results.