The percentage of people who can make consistent earnings from forex trading is very low. Well, this is not to demotivate or make you give up the thought of becoming a full-time forex trader but to educate and teach you some strategies that will help you with making an assured profit in this field. Though there are a lot of so-called proven strategies given and shared to make it a success in forex trading, one a handful of them work.
We have done some research and have come up with strategies that are proven to work in the majority of cases if not in all. If you want to understand trading in deeper, and someone who would guide you with the investment https://tradenation.com/ can be your reliable option.
- Trend Trading Strategy
Trend trading is a forex strategy that is precisely popular amongst beginners for its reliability of bringing back the profit and easy to understand the concept. In this, the trader’s main motive is to identify the upward and downward trend in a currency price movement, duration, and strength before deciding on the entry and exit points.
The strategy works on the ability of the trader’s knowledge and the ability to predict the movement of the currency with the help of tools like volume measurements, directional indices, moving averages, historical trends, relative strength indicators, and others.
The trader’s main aim is to exit their current position and limit the losses. You must be able to identify the strong trend and must have the patience to invest for a longer period.
- Day Trading Strategy
Day trading is possibly the most common trading strategy which guarantees minimum loss if not gain. It is a one-day trading strategy and almost every market is open to this but is most commonly done in forex trading. As the name suggests, the entry and exit must be done within the same day. It is usually open for 5, 10, or 15 minutes.
In this, traders must analyze the market and broaden their research areas to understand what fields they can invest in. Generally, traders invest in news, events, elections, etc. after analyzing in which direction the market is moving to maximize the profit. You can sell stock, contracts, and options based on the type of market you are trading in.
You must familiarize yourself with different market trends as Day trading doesn’t limit itself to options and assets to invest in. You can also set a daily risk limit which is mostly 3 to 4 percent. A stop-loss order is another way to limit the losses. If you are new, make sure to start with the nominal amount.
- Position Trading Strategy
Position Trading is perhaps the term you have heard as most people make their investments in this strategy. In this, traders hold on to their positions for a longer period which can be months or years. Such traders possess the view of the market for the long-term and must sustain with minor market fluctuations.
This is indeed a simple trading strategy but requires patience throughout and analytical thinking and study of the market. Traders must be able to identify the ideal entry and exit time. They must know which event can appreciate or depreciate the price of the forex they are holding as these trading are highly influential with many micro and macro-economic conditions.
Traders must know the geo-political, socio-political, and other conditions of the world and which even can create a positive or negative impact on their forex. They must be able to manage the risk. If this strategy looks ideal to you and you can afford to invest a longer period in trading, it is better to create a demo account and do some research and practice.
- Swing Trading Strategy
One of the simplest trading strategies that help you make money in a short period and is comparatively easy to understand. In this strategy, traders hold onto the position for a few days or weeks before selling them. The “swing” in the price determines whether to hold on to the security or sell them and from here the strategy has received its name.
Traders must keep an eye on the market and when the “swing high” or “swing low” is hitting. The price always keeps on fluctuating back and forth and as the intention is to get a profit on the money invested, traders take the decision when is the right time to sell the security or hold them for a few more days or weeks.
Though the probability of losing is never zero, the chance of hitting the profit is more. Do not panic if the price has hit low as the swing happens overnight and the price reaches high when you least expect it so it is better to study the market and pattern before initiating the trading.
Forex trading can give you a consistent income, but it comes with its own risk. If you want to become a pro, make sure you learn the art of acceptance and risk management. Try out the strategies discussed above to increase the chances of making a profit in forex trading.