Currently, there are several Forex trading strategies that has been in use for over a decade, with some of the ideas based on technical use of charts and numbers and the others based on the fundamental understanding of the forex market with reference to current events. Few of this ideas has grown popular through its wide acceptance while the other idea has continued to be in use by only few Forex traders. We will be discussing the different categories of this strategies, even from the ones with high level of complexity to the simple ones.
Support and Resistance Levels Forex Trading Strategy
This strategy is required by all forex traders at all levels, even from the beginner to the expert stage to learn how to use the support and resistance levels on the charts. this strategy due to its effectiveness, has been proved to be very useful to trader trading on either Forex , commodities, stocks or any other instruments. It serve as basis for every trading activity and analysis. This support and resistance levels, can be easily identified by good traders even on a naked chart.
This strategy named after a famous Italian mathematician is one of the most popularly used forex trading strategy in the forex market. It’s a medium-long term trading strategy that is used by following the repeated support and resistance levels method. Fibonacci trading strategy is used by taking advantage of the wavy movement of the market. It is define by ratios that can be used to identify potential resistance and support levels on the financial charts. 61.8%, 50% and 31.8% are the most commonly used Fibonacci ratios.
The FX Market Leaders uses this method to double check trading decisions as they are analyzed. this method is used by focusing on a certain pair of currency over different time frames, by spotting trends on bigger and smaller scales. Thereafter, a better analysis is made on the overall trend. while there’s no limit on how many frames to follow, the recommend idea is to following not more than 3-4 time frames at a time and the good combination can be 15 minutes chart , or + 30 minutes chart and +5 hours chart respectively.
This method offers low risk and its been proved to help expert traders make enormous profit over a period of time. Though its been evaluated to be easy, yet its seems hard to understand by newbies in Forex trading. To make profit with this strategy, a great deal of patience and awareness is highly required. Bringing emotions to this trading platform will not favor trader because of the compulsive action that will want to set in.
Horizontal Levels Forex Trading Strategy
This trading strategy has been recommended to apsiring or newbies in forex trading to be the first strategy to learn. It helps traders to analyze the charts position and can be use inline with other Forex trading strategies, yet , they can still be accessed as a standalone for trading Forex.
The Candlestick charts are the most sort after by retail traders and investors. Aside from other charts like the line charts, bar charts and etc, the candlesticks chart shows analysis for past price action, and offering its users the ability to decide on future price action based on how the prices reacted in the past. This market indicator as been tested to yield best result even at volatile and less volatile times when combined with one or other two indicators.
This trading strategy is been use by the FXML’s top analyst as one of their leading trading strategies to check which side of the market trend they’re usually on, before trading. the process is built around picking either a top or a bottom. This idea might seem very easy to newbies but without the right training and continous use with perserverance, its not going to yeild result because you’ll be cut up with not being able to make the right decisions due to your inability to identify the trends.
This trading strategies is the most widely used strategy by big players in the financial markets, both the private and institutional organization. because it helps alot in limiting risk and increasing probabilities of winning. Among several strategies out there, Hedging has be proved to be the best. That’s why its in widely use by many large institutions as a compulsory component of their trading tactics.
For traders to be successful in this career, several factors needs to be considered for both long term trade and short term trade. This factors includes using either the fundamental indicators, technical indicators or both. However, on the other hand, overcrowding the charts with too many indicators will contradict each other which will later result in a cloud judgement.
Creating a trading plan
A recent survey carried out on the forex market indicated that 80% of new Forex traders fail all the time, and this is due to the fact that there wasn’t a clear plan on ground. Like soldiers would need amunition, skills and telex to be able to make it through in a war, Same way a trader will be required to get a full hand of information, the right strategies and the best tool to be able to make it through while trading Forex.
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