explanation of forex trading strategy, its types, and the most profitable forex trading strategies listed in simple words for the common man.
Let's start by answering the most basic of questions. What exactly is a Forex trading strategy? Traders use certain methods that help them in making a decision regarding the buying and selling of any currency pair. To generate profits, a trader must use specific trading techniques. Trading strategies are of various kinds,Guest Posting and can often be looked at as manual or automated signals for trading.
Manual strategies are when traders manually search for signals. For example, through a computer. Automated strategies are those where there is no human input required and the work is done by an algorithm. The algorithm finishes the job of locating signals and executing them.
Experts say that most forex traders lose their capital quickly. This is not surprising. If we go looking for reasons, a blatant one is the absence of trading strategies. While from hearing the words forex trading strategies, one may feel that it is a one fit for all thing- a wiser person would know that forex trading strategies are rather unique for everyone.
Undoubtedly, these seemingly complex words can hardly be called some no-brainer, but the common person also does not need to be so frightened of them. It's important for any individual to first realize that long term wealth cannot be acquired without creating a strategy for their own. Profits without a strategy are only short-term.
To help you achieve your goal, here's a list of the top forex trading strategies.
Candlestick strategy
Candlestick trading is one of the most popular and profitable Forex trading strategies. One must keep in mind that this strategy is built on the spring principle of price movement. You'll need a chart and a W1-timeframe. The size of the of the candle bodies has to be estimated. Different currency pairs like AUDCHF, AUDUSD, GBPCHF being some examples. By picking the distance between the candle's open and close. Long position means a bearish candle, whereas short indicates bull. This has to be done within a week of the candle.
Scaling
This strategy is a very sophisticated trading technique, amongst all forex trading strategies. These trades are extremely brief, and can last only a few minutes. Scalpers try to beat the offer as quickly as possible. Scalpers only make a few pips profit before exiting. Usage of low time-frame charts is common in this strategy. An example of this advanced forex trading strategy is the Forex-1 minute Trading Strategy.
Parabolic profit
It is a popular forex trading strategy that brings people profits. Three moving averages will be needed, along with the Parabolic Indicator. To make the analysis easier, use different colors. In case you want to open a buy deal, ensure that the Parabolic is at the bottom. If the position is long, it should be at the top.
Bollinger Bands Trading Scheme
Bollinger Bands are a tool for technical analysis. This forex trading strategy uses them. The standard deviation is used to determine where the bands are located. They're useful for giving immense information on topics like periods of market consolidation and trend continuation, as well as potential price targets. There are three bands in total, and they revolve around SMA, or the simple moving average. the default value for this is 20. There are two default boundaries- lower band and upper band, and the price generally lies between these two.
Fibonacci trading
Fibonacci Retracements are another profitable forex trading strategy traders use. These are generally used for the identification and trading of the support and resistance levels. They are useful in determining where to place orders for the market. Many traders prefer the Fibonacci method because it is suited to their own unique trading strategy. The only thing that is used are hard data and there is almost blog here no emotional interference. A trader can use these strategies for both short and long term trades.