Learn Forex Trading Strategies
Before coming up with a forex trading plan a trader must learn about the various forex trading strategies that they can sue to trade forex. Coming up with the right forex trading strategy can increase your chances of becoming more successful in forex trading.
For traders who want to learn about forex strategies there are 50 forex trading strategies listed in the forex trading strategies section of this strategy. This strategy section also shows traders how combine these trading strategies to create a forex trading system. The forex trading is a set of rules that will be used by traders to generate forex signals. For example the trading system rules will specify how two or more indicators will be used together to generate a buy or a sell signal.
As a trader the strategy you select should be applied in your trading once you decide what type of trader you are & what type of trading method you will be using to analyze the forex market moves.
For example you might decide you want to be a scalper you'll use your scalping strategy and only open traders for a few minutes. If you are a trend trader you will use your trading strategy after you have determined the trend of the market. If the trend is upwards you will use your strategy to open buy trades.
If you are a day trade you will use your strategy to open trades that will only be opened for a few hours. Your trades should all be closed during the day & you'll not hold your trades overnight. As for the trading method which may be that of trend following you will first draw forex trend lines on the currency chart to determine the overall market trend and after that you will then apply your trading strategy to open forex trades.
In technical analysis there are various techniques used to trade currencies which a trader might use to ascertain which of these techniques of trading they will be using when trading the FX market. After select in their trading technique traders will then apply their trading strategy to open currency trades.
Types of Forex Trading Methods
There are two general techniques of trading the currency market, these are:
1.Trend Trading
2.Range Trading
Trend Trading
In this method a trader will first of all determine the overall market trend before applying their trading strategy to open forex trades.
To determine the forex trend - this can either be an upwards trend or a downwards trend.
A trader may use trend lines or moving averages to determine the overall market trend. After determining the market trend then the trader can use their trading strategy to open forex trades.
For example a trader may determine that the market trend is upward by using moving averages. The trader may then use a forex indicator such as Bollinger bands and open trades once the price retraces to the lower Bollinger band because this lower band will act as the support level of price. Therefore the trading strategy that the trader will be using is the strategy of resistance and support levels and the trader will be using Bollinger bands to determine these points and open and close trades based on these points.
Range Trading
Range trading is a technique of trading currencies that move within a particular band of prices and only oscillates between these two points without moving much outside these two points.
A trader will then use the strategy of support and resistance to determine which levels to open buy or sell trades. The trader will draw a support line and a resistance line. The support level will be used to open buy trades and the resistance level will be used to open sell trades.
The most popular technique between these two is the trend trading method. Traders should always try to trade with the trend method as this technique is the most reliable technique when it comes to trading currencies. Even though sometimes the market will be trending and at other times the market will be moving in a range when the market is consolidating traders should try to trade the currency market only when there is a trend. After determining the trend traders will then use their trading strategy to determine when to open buy or sell trades that are in direction of the overall market trend.
Once you've decided what type of trader you're: scalper, day trader or swing trader you should then come with the following:
1.Trading Method
2.Trading Strategy
After coming up with this two you will then combine these two & use these to determine when to buy or close trades.
You can then practice trading on the demo account so as to determine the profitability of your trading technique & strategy. You will then use the results to improve the profitability of your method & strategy & once you've gained experience to trade with these two you can then open an account & begin trading the live forex trading market.
