Five must-know Forex trading strategies
One of the best ways to ensure this is to have a trading strategy that traders can use and if it is well-reasoned and back-tested, traders can trade with confidence, writes SEOPros, one of South Africa' s leading boutique SEO and online marketing agencies.
While there are many trading strategies to choose from, the following five have been identified as some of the best being used by traders today.
Scalping
This revolves around short-lived trades, which are sometimes held for only a few minutes. Scalpers try to beat the bid/offer spread quickly, allowing them to skim only a few pips of profit before they exit the trade.
Scalping is one of the most advanced trading strategies and it involves a significant amount of risk. The strategy typically uses low timeframe charts, exactly like those that are found in the MetaTrader 4 Supreme Edition package.
MetaTrader 4 is also perfect in offering some of the best forex indicators which can be used when traders scalp, such as the Forex-1 minute trading strategy.
News Trading Strategy
News trading is a very lucrative business if traders are on the right side of the market as result of a sudden rise in volatility surrounding news releases. This strategy offers traders with a unique approach to trading risk events.
It is different to conventional news trading as it looks for a divergence between the actual news data and the technical indicators. If the fundamental data suggests that a forex pair should rise but the indicators show that the forex pair should fall, a trade signal will be triggered.
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Swing Trading
This is another strategy that uses trend analysis, and it is trading which is spread across a longer term with positions held for longer than a single day.
In this strategy, the trader defines a significant movement of a forex pair and places the order in its defined timeframe, which could take days, weeks, or even months for the goal to be achieved.
It should be noted that this strategy may attract additional fees depending on the broker’s discretion, such as overnight fees, swaps, rollovers, and others.
Support and Resistance Trading Strategy
This is another popular trading strategy which is quite simple. It is used to identify critical areas present in the different markets including market direction, timing for entry, and exit positions.
Support refers to the area on the price chart where prices on a forex pair have dropped and are struggling to break below. Resistance is the area on the price chart where prices have risen but are struggling to break above.
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Breakout Strategy
A breakout is typically formed when prices which are trading in a specific price range breaks it, resulting in it trading above or below the range.
A breakout can also happen when prices break at a certain level whether at resistance, support, Fibonacci, or even pivot points.
The strategy is used to enter the market once the breakout happens and to only exist once volatility dies.
Ready to try out these forex trading strategies?