Forex Trading Strategies

As with any business, Forex Trading needs to be studied and then the strategies can be implemented to avoid pitfalls in the market.  There are no magic formulae in Forex trading.  Some important tips to keep in mind are:

General Tips for Amateur Traders:

  • Make a plan on the risk you are willing to assume – stick to your plan, when you are a seasoned trader evaluate and change your goals accordingly.
  • Make informed decisions on trades. 
  • Know your tolerance for risk to minimize losses.  You can spot patterns in your trading history.
  • Work with a good Forex broker to get good guidance and help to advance your career.  He can help you with the ins-and-outs of the market and also helps you make connections while you are still working with the demo account.

Need for and Importance of Forex Trading Strategies:

As a trader once you are comfortable and have jumped in to the trading market you need to formulate an effective Forex trading strategy to suit your trading needs. Put in reasonable time and effort as a trader to build effective strategy to determine your success in the market.  There are 3 major categories that a trader has to take into account.  Here’s why one needs to understand how the market works to make informed decisions.

Indicator strategies

Price Action strategies

  • Fundamentals of Forex  strategies

Indicators play an important role and information is available in chart form available to anyone with Forex software.  These indicators are mostly used by traders who like using technical analysis.

  • Moving Average Cross Strategy
  • Parabolic SAR Strategy
  • Stochastic Oscillator Strategy
  • MACD Divergence Forex Strategy
  • Combined Stochastic Oscillator/MA Strategy

Price Action does notuse charts or fundamental indicators – they purely reflect price action.  This can be used by long and short term traders who don’t want to wait for information that standard indicators offer and like to see how the market is functioning in real time.  The Indicators in this category are:

  • Inside Bar Strategy
  • Simple Price Based Trading System
  • Martingale Trading System
  • Scalping Forex Strategy
  • Support and Resistance Strategy
  • Pin-bar Trading System

Fundamental Forex Strategies refer to all the underlying factors behind buying and selling of currencies.  Indicators such as interest rates and statistics play an important role in how the market behaves.  These are very popular and benefit those trades who like to look towards the long term and prefer this approach to technical analysis.  The factors to look for are:

  • Important News Trading Strategy
  • Carry Trade Strategy
  • Wednesday AUD/JPY Strategy

Forums are available online for people who want to join in a discussion to get a better understanding and share tips about the Forex market