Trading currencies on the financial market shouldn’t be as harsh as some might believe. A solid trading strategy can make it a pleasant and profitable process if the traders use these strategies with a solid trading plan at hand.
What does a good trading strategy entail?
A good strategy allows traders to operate efficiently in the market, make sustainable profits. Also, it doesn’t imply that one must use only one system. You can employ a variety of them to achieve success. Let’s see what the commonly implemented strategies in a profitable Forex market are.
The day trading strategy
This strategy simply implies trading ina specific times of the day. But as a trader, you never trade after the trading session is over in the time zone you are trading. Day trading requires constant monitoring of the market and hence can be exhausting. However, some traders find it particularly suitable in their cases.
This is one of the favourite strategies for short term traders. They await the big economic events to be released to profit from the volatility in the market. If you are good at fundamental analysis and prone to risky approaches, this strategy is for you. Also, beware of being on the wrong side of the economic event. It could be particularly capital intensive. And especially if you have an underfunded account. This could lead to a forced closeout.
News trading can entail riding on high volatility, but an account without sufficient fund cushion won’t sustain the losses while the market reacts. Here are just a few economic releases to be aware of: Non-Farm Payrolls, Retail Sales, Gross Domestic product etc. These tend to move the Forex, and the numbers vary largely from expected.
The hedging trading
While this type of trading is not allowed to traders in the USA, it’s trendy in the rest of the world. It’s a trading strategy that means taking long and short positions simultaneously on the same currency. Therefore it enables hedging for both parts of the trade. The two positions could be established after some important economic news release and tend not to cancel each other. However, be prepared to pay for two different spreads.
Here it is important to outline the importance of spreads. When making your trading plan and choosing the broker, make comparisons and see what every broker offers. For a start, peruse the t1 markets review, it might be your best broker to pleasantly surprise you. Opting for the right trading intermediary also stands for a part of your trading strategy.
The momentum trading strategy
Using the technical indicators is at the core of this strategy. Technical analysis is the main means for savvy traders who seek to find the best exit and entry points.
Therefore, learning to show some most common indicators, such as MASCD, would be helpful. MACD stands for Moving Average Convergence Divergence histogram. It reflects the market’s predominance in buyers or sellers in the market. If this indicator is rising, it indicates more buyers, for instance. Download slope indicates more sellers on the Forex market.