Forex trading is one of the most popular ways for professional traders to make money and you need to adopt certain trading strategies in order to remain successful. You should learn to use the technical indicators and have a proper trading plan in order to be consistently profitable with currency trading. While the Dollar and global equities carved out broad range instead of extending the trend of previous years, by adopting certain Forex trading strategies for 2017 mentioned below, you can definitely succeed as a Forex trader. Normally, forex strategies can be classified into different categories like medium-term, long-term and short-term strategies which include techniques swing trading, scalping and intraday trading. You should also understand money management techniques to effectively manage your risks while trading Forex. You should also determine the exit and entry criteria clearly for each trade before opening any position.
Scalping is a Forex trading strategy which is applicable only for short-term positions which are held usually for just a few minutes. Scalping involves finding some volatile currency pairs and to quickly beat the bid/offer spread and grasp a few points of profit before closing. Scalpers generally place a large number of trades with each trading making a small percentage of profits. Usually, traders can expect to make profits between 5-10 pips for each trade when using Scalping strategy but along with leverage, you can boost your profits significantly.
Swing Trading Strategy
Swing trading is a long-term strategy which requires holding a position for several days. It is suitable for part-time traders who can’t monitor the price charts throughout the day and can only spend few hours every day for trading. Swing trading requires traders to identify medium term trends and place the trades only when they know there is a high possibility of winning the trade. It requires traders to place larger stop-loss orders to avoid the risk of losing their money due to sudden volatility in the market. Swing traders can make use of the 4-hour charts and apply technical indicators like moving averages or stochastic oscillators to find the best entry and exit position.
Trend Trading with help of Technical Indicators
As a forex trader, you should understand the use of technical indicators to successful predict the currency movements and market trends. There are various strategies based on Indicators like Moving Averages, Bollinger bands, RSI etc. Fibonacci retracement is also one of the popular trading strategies which can help you to succeed as a currency trader. You can apply Japanese candlestick charts and other strategies based on analysis of graphical patterns extracted from the price action charts. 24option forex is one of the popular trading platforms where you can get the latest market news and real-time charts which make it easy for traders to apply technical indicators.
Currency News Trading Strategy
Forex traders can capitalise on the currency movements caused by important news events like the US jobs report or Non-Farm Payrolls reports, Interest rate hikes, quarterly GDP reports of various countries, Election results etc. You should have a solid plan for trading any upcoming events. The DailyFX Economic Calendar is a helpful tool to keep track of upcoming economic events like the Bank of Japan Rate Decision or Federal Reserve Minutes. Identifying support and resistance levels is very important before opening any trade positions based on the market news. There are two simple tools namely trend lines and Pivot Prices which you can use to figure out the support and resistance levels in order to identify a high probability entry off a news event. While Pivot Prices are object points of support and resistance levels based on prior price action, trend lines are manually drawn lines connecting the price points in the direction of the trend. You can use techniques like Slingshot strategy to boost your profits when trading based on Currency news.
Apart from the above trading strategies, some important currency pairs to monitor 2017 are EUR/USD, EUR/GBP, USD/JPY, USD/KRW AUD/CAD and GBP/JPY. Long GBP/JPY position can be profitable because of the depressed sterling caused by Brexit uncertainty and an evolution of risk trends. Also, holding a longer position of USD/JPY can be suggested due to yield differentials driving outflows from Japan and higher inflation expectations. You should hold the EUR/GBP position short since no new negative news about the UK can help in the recovery of undervalued sterling.
Forex traders should carefully examine all the techniques and which strategy will suit them based on their trading goals and style. You should choose the technique based on the timeframe and trading instrument. If you are a beginner, you should never use leveraging while placing forex trade since it can be very risky. You should learn to place stop-loss orders in order to minimise your risk and practice initially with a demo account.
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