Forex Trading Strategies

Forex Trading Strategies that really work!

Investing is a thrilling opportunity that can provide short-term gains and long-term financial security when done correctly. Just like a basketball team does not go into a big game without a plan, you should not go into investing until you settle on one of the various effective strategies to increase your chances of winning.

In this piece of writing, you will learn about three strategies that are especially helpful for beginners. This is especially important in unpredictable markets like the foreign exchange market or so-called FOREX. These strategies are somewhat easy to follow and can produce considerable profits when done appropriately.

As a reminder, one should perform Foreign Exchange trades using a free dummy account from one of the large brokers to learn how to effectively use these strategies before you start investing with your hard-earned money. Once you are at ease with using these strategies, creating a live account is very easy and you will be ready to go into the Forex market with the knowledge and skills required to become a successful investor.

One of the uncomplicated Forex trading strategies to master is the Currency Analysis. This is a rather perfect method of predicting market movements and currency fluctuations. There are two different methods used to analyze currency: technical analysis and fundamental analysis.

Technical analysis relies on the price of currency pairs to classify trends and measure the price volatility of a given currency. With this data, you’re able to detect the trading signals (when to buy and when to sell).

On the other hand, Fundamental analysis takes a different style. Instead of evaluating the currency pairs, fundamental analysis requires that you take into consideration the outside aspect such as the unemployment rate of a particular country and the stability of the current political situation in that country. Politics can have a huge impact on the value of currency and many fortunes have been acquired by relying on the techniques of fundamental analysis.

These two currency analysis strategies are excellent for beginners because the analysis process is not very complex and trading signals are usually easy to identify.

Next is Day Trading. This is one of the most well-liked Forex trading strategies and it is employed by both novice and experienced investors alike. As a day trader, you will not hold any trading positions during the night. You may make multiple trades within a single day but you will execute all of your trading positions before the market closes.

If you decide to use a day trading strategy, bear in mind that the longer you keep a trading position, the higher your risk of losing on the trade. By studying the currency fluctuations on a daily basis, it becomes obvious that practically every currency fluctuates throughout the day. Although these price fluctuations may be small, many trades over the course of a single trading day can result in large profits.

Many experts suggest that day traders use notably more investment capital than some of the other strategies mentioned because the fluctuations are magnified with larger amounts of money. Since Forex relies on leverage, it is relatively easy to make large trades without having a lot of money involved. The drawback to this system is that you can easily lose money that you cannot afford to repay if leverage works against you during a particular trading day.

Range Trading. Oftentimes also known as support and resistance levels, this popular Forex trading strategy is easy for beginners to learn and exercise. This strategy relies on the truth that each currency has price fluctuations throughout the day and the week that remain relatively stable.

Many commonly trading currencies have fairly predictable price movements and by studying the charts for a few days, identifying the trading signals is easy. For instance, if a currency generally fluctuates between $1.20 and $1.54 throughout the day, these would represent your trading signals. The support price is $1.20 – this is when you want to buy this particular currency. The resistance price is $1.54. As the currency value hit at this number, you want to trade out of the position and cash in your earnings.

Based on the facts presented, the key to this strategy is to learn the typical fluctuations of your target currency well enough to identify the support and resistance prices. Although the profits generated using this range trading strategy are typically not as important as traditional day trading or currency analysis, the constant profits you can gather using this method makes it one of the better options to consider as a beginner Forex investor.

The three strategies mentioned represent the most fundamental FOREX strategies that essentially work. There are tons of other strategies and there are even more methods that claim to guarantee profits. Unfortunately, these systems are often beset by failure and do not work in many scenarios.

Currency Analysis, Day Trading, and Range Trading rely on sound investment philosophy. Instead of gambling your money away unsystematically, you can use these strategies to create quantifiable gains in a comparatively short amount of time.

If you have never traded Forex in the past, please do not forget to set up a free dummy account where you can practice these strategies before investing real money. Although using these strategies isn’t hard, there is risk involved to any investment opportunity and currency exchanges are believed to be one of the more unstable investment opportunities on hand. Of course, great risk comes with the potential for noteworthy rewards but there are many more people who have lost an huge amount of money trading Forex erroneously than those who have gained wealth.

By exercising these strategies and looking for trends that can promise small but reliable profits over a long time period, you significantly boost your chances for long-term victory as a Forex trader.