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FOREX Trading Strategies
To be a successful FOREX trader you need a trading strategy. There is no one set strategy that is good for all traders; rather, each trader needs to develop his or her individual approach to the FOREX. Some traders rely solely on technical analysis while others prefer fundamental analysis, but many successful FOREX traders use a combination of both to get a broad overview of the market and for plotting entry and exit points.
Technical analysis relies on one key concept: Prices move by trends. The common saying in FOREX is 'The trend is your friend.' Market movements have identifiable patterns that have been studied over many years and a thorough understanding of these trends and how they can be read forms the basis of a good trading strategy.
There are many analytical tools available to understand market movements. The beginner FOREX trader is well advised to study each one separately for getting a working knowledge of their concepts and application. Once one has been understood, keep on using it while studying others. Each tool tends to reinforce the others.
Support and resistance levels are used in many FOREX trading strategies. 'Support' refers to the price level that is repeatedly seen as the bottom - when the price reaches this level it tends to rise. Resistance levels are upper prices that the currency rarely trades beyond. Support and resistance levels contain price movements for a period of time.
When currency prices break through support or resistance levels, the prices are expected to continue in that direction. For example, if the price rises above the previous resistance level, it is seen as bullish - the price should continue to rise.
To find support and resistance levels, price charts need to be analyzed for unbroken support and resistance levels. Charts can be analyzed in any time frame; however longer time frames establish more important support/resistance levels. Traders can use support/resistance levels to determine when to enter or exit a transaction.
Moving averages are another common tool in FOREX trading strategies. The simple moving average (SMA) shows the average price in a given period of time over a specified period of time. Moving averages serve to eliminate short term price fluctuations giving a clearer picture of price movements. FOREX traders can plot a SMA to determine when prices have a tendency to rise or fall. If prices cross above the SMA they have a tendency to keep on rising. Conversely, prices below the SMA have a tendency to continue their downward motion.
These are two examples of trading strategies that can be used individually or in combination. In practice, the FOREX trader should have a repertoire of trading tools to examine market conditions and to support the findings of one study or another. If several indicators show that the market is moving in a particular direction the trader can act with more assurance than when relying on a single indicator.
Similarly, fundamental analysis can be used to reinforce technical findings, or vice versa. Ideally, the FOREX trader will take several indicators into account when plotting a trading strategy.
Every trading strategy should provide clear guidelines about when to enter a trade, what to expect in terms of market movement, when to exit a trade, and how much loss can be accepted in case the deal moves against the trader. Following these simple guidelines and learning about technical analysis can help you become a successful FOREX trader.
Forex Trading News
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LONDON, February 6, 2012 /PRNewswire/ --Vantage FX UK is helping traders to tell their adjustable pegs from their leading indicators with a comprehensive Forex trading glossary hosted on its website, http://www.vantagefx.co.uk/ ... A Beginners Guide to Forex Trading and the US Dollar - Tue, 31 Jan 2012 07:43:00 -0800
SADDLE RIVER, New Jersey, January 31, 2012 /PRNewswire/ --Forex or FX for short, foreign exchange trading is one of the most widely traded markets in the world while all the major currencies trade against ... Best Forex Trading Platforms Announces New Website Launch - Sun, 05 Feb 2012 00:20:00 -0800
Best Forex Trading Platforms has recently announced the launch of their new website ranking and reviewing the best online forex platforms. They have made it their goal to bring top of the line platforms to trader all around the world. (PRWeb February 05, 2012) Read the full story at http://www.prweb.com/releases/2012/2/prweb9167589.htm EUR/USD Forex Forecast Weekly Review 5 Feb 12 - Sun, 05 Feb 2012 08:31:43 -0800
Simultaneous Release at TheGeekKnows.com Learn Forex Trading and read exclusive EUR/USD Reviews. Good day forex traders. In the previous EUR/USD forex forecast review we noted that the SMAs were turning bullish. In fact the short term SMA 20 had already began to slope up. The immediate concern of the Euro Zone budget deficit crisis probably remained to be Greece [. Leading Australian Forex Trading Broker IC Markets Ends a Record 2011 Year - Sun, 29 Jan 2012 06:02:11 -0800
International Capital Markets Pty Ltd (IC Markets) a market leading Australian forex broker today announced its 2011 results culminating an exciting year for the company. Over the 2011 year forex trading volumes increased by 83%, with the number of clients increasing by a record 93% representing two straight years of double digit growth.SYDNEY, AUSTRALIA (PRWEB) January 30, 2012 International ...
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RELATED ARTICLES
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