Forex Trading Strategies – ForexLive

Forex
Trading Strategies

In
trading in the forex market, a trader must
use a set of strategies to get ahead of the game and avoid further losses. The
following is the list of basic tactics most traders use to make more profits in
forex trading.

Two
Basic Forms:

1. Long
Trade –
traders would bet that the price of a currency pair
would rise in the future, and they would profit from it.

2. Short
Trade –
is the opposite of the long trade. It is a bet that
the currency duo’s price would fall in the future.

Four
Basic Types:

1. Scalp
Trade –
in this strategy, you as a trader should hold your
position for a short period of time, such as seconds or minutes, and the
amounts of profits you would get are limited in terms of the number of percentage
in points (pips). This trade is supposed to be cumulative in a sense that a
small profit created in each individual trade is being added up to a huge
amount at the end of the day or your preferred time period. Using this tactic, you
need to rely on the predictability of price swings, but this strategy is cannot
handle volatility. Hence, you must restrict your trades to the most liquid
currency pairs and do your positioning at the busiest times of trading during
the day.

2. Day
Trades –
these are short-term trades in which your positions
are carried and liquidated on the same day. The duration of using the day trade
strategy could take up to hours or at least minutes. If you would like to be a
day trader, you need to equip yourself with technical analysis skills and
knowledge about important technical indicators to maximize gaining profits. In
comparison, the day trade tactics also rely on gradual gains throughout the
day, just like scalp trades.

3. Swing
Trade –
in this strategy, you as a forex trader need to hold
your position for a period longer than a day or 24 hours. For instance, you
could confine your trading position for a couple of days or even weeks. The
swing trade tactic is very useful during major announcements by governments or
at times of economic commotion. Since you would have a much longer timeline
using this strategy, you are not required to monitor the markets throughout the
day. As a swing trader, you should have a deeper understanding and always be
updated with economic and political developments as well as their impact on the
movement of currency, in addition to technical analysis.

4. Position
Trade –
using this strategy, you should hold your position on
your chosen currency pair for a much longer period of time that could last for
as long as months or even years. This type of trading tactic requires more
fundamental analysis skills since it provides a reasoned basis for your trade.

Other
Forex Trading Strategies:

Some
traders are using strategies that are based on the broader area of technical
analysis, such as breakout and moving average, to calibrate or polish up their trading approach even more.

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