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Friday, 26 June 2015

Forex Trading Strategies

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Forex Trading Strategies


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This forex blog from forex friend loan outline about forex trading strategies. Know more about various forex strategies used by forex traders for maximizing their profit and also minimizing their loss.

Forex strategies are essential for a forex trader to profit from the market. Forex trading strategies make a trader more sophisticated and confident by helping him in making right calculations about the market. In a market with always changing exchange rates, it is foolishness to trade hysterically by just following the emotions or advice from unreliable sources.

There are lots of forex trading strategies followed by forex traders. They can be broadly classified into two type of strategies are profit maximizing strategies and risk minimizing strategies. The strategy differs with individuals as each trader has unique needs and has unique trading abilities. A trader must design a forex trading strategy according to many factors such as his or her initial investment, account size, trading ability, risk tolerance, currency pairs trading, geographical limitations/advantages, the broker to which he is affiliated, the trading system he/she uses, the profit goal (short-term profit or long-term profit), etc.

Forex Trading Strategy


The most followed forex profit maximizing strategy is the leverage. Leverage allows forex traders to trade with more funds than in his or her account. The leverage is provided by the forex brokers to their clients. The usual leverage is 100:1 – i.e., for $1 in account the trader can borrow $100 from his broker. Day traders get much more leverage than other traders and the ratio leverage differ with brokers and also with the account minimum, type of contract trading etc.

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The most popular forex risk-minimizing strategy is the stop loss order. Stop loss orders help traders to limit their loss by stopping a trade at a preset price. Forex trading systems allow traders to set their stop loss order prices. One related strategy is the trailing stop losses, which are proportional stop loss prices that come into play only when the prices are falling. There are also many other types of stop loss orders available which mainly depends on the broker to which the trader is affiliated to.

One another related strategy is the automated order entry. Automated order entry enables a trader to enter into a trade at a preset price rate automatically. The trader can set the price at his trading platform. Automated order entry methods help traders to enter the market at a most favorable time. Apart from these strategies forex traders can use forex futures and forex options to cover the loss and well as to cover the profit. These contracts help forex traders to buy or sell currencies at a predetermined rate at a point of time in future.

Apart from these trading strategies, forex trader follows many other strategies for choosing currency pairs, trading hours, entrance and exit prices etc. Irrespective of the type of the strategy, all forex strategies involve risks. The success of a forex strategy depends on many factors like the market condition and the discipline of the trader.


Forex Trading Strategies Is The Key To Success


When you enter the Forex trading business, you need to be prepared that it will not be a cakewalk. It calls for a lot of planning and decision making. Without the proper Forex trading strategy, you will find it difficult to make much headway.

Before stepping into the Forex trading market, you need to have a certain strategy in mind. A well thought out Forex trading strategy can be your key to success. It can also keep you on the safer side and help to minimize your losses.

Implement A Proper Trading Plan and Don’t Trade Beyond Your Means

It is very important to have a trading plan and when dealing in Forex trading. Once you have a plan, let nothing deter you from it. Remember, there is no place for emotions in trading. Following your emotions blindly is a sure shot recipe for disaster. Whenever you trade, it should be in a cool and calm frame of mind.

A very good Forex trading strategy is that you should only speculate with money that you can afford to lose. Not to say, that you want to lose anything, but whenever you invest money or trade in it, you should always use money that you can do without, money that is in excess of your requirements. It is never a good idea to touch upon the money that you require to run your house and fulfill the basic requirements of your house.

Understand The Trends Of The Market

In Forex trading, market trends are your closest friends. If you are able to understand trends and make somewhat accurate predictions, you will be quite successful as a trader. Understand that there may be short-term fluctuations in the currency values. After all, the market is volatile. However, you should always refer to the long-term trends and not be worried about periodic ups and downs.

Another important Forex trading strategy is riding the Forex market till it shows signs of turning around. Do not be greedy and ride the win too long, else you might just be caught off guard and lose money.

Trade Wisely

A lot of newcomers tend to look for some signs or leading indicators that will help them make a good trading decision. The truth is, in the Forex market, there is no guarantee that you’ll be able to predict the future accurately. Some software can help you make calculated speculations, but they could easily swing one way as the other.

A sound Forex trading strategy is that you should stick to popular currency for trading and stay away from this market. Since there is very little public participation in the thin market, you will not be able to liquidate your position easily. Moreover, trading in too many markets is not advisable. Stick to the popular currency pairs till you learn to do better.

Update Your Knowledge

Lear, learn and learn some more – and that’s a Forex trading strategy that will never fail you. Work towards gaining in-depth knowledge in this field, so that you can become an astute trader. Read up as much as you can on the subject and add to your existing information. While a newcomer can get by with some general guidelines and tipsArticle Submission, a seasoned Forex trader will need more knowledge to make decisions.

Forex Trading Strategies