In just about any competitive endeavor, there are a variety of strategies that you can use to somehow gain an advantage over your other competitors.
That is true in Forex Trading as well. In this article, I will go over some of the most popular trading strategies that you can employ to start making best money investment in this industry.
1. Trend Trading
This is probably the most common Forex Trading strategy available. This is where you look at how the market performs and you will find a certain “trend” based on the price movements.
If the trend is moving upward, traders usually create entry and exit points to make sure that they get the best end of the deal. If the trend is moving downward, the trend trader expects the price movements to go down as well (and may continue to go down depending on certain economic factors).
2. Momentum Trading
A little bit similar to the previous strategy, Momentum Trading is where the investor will look at indicators that will help them look at a shift in the momentum or price direction of a particular currency.
Momentum traders hinge on the notion that the price movements will be for the long- term and they will make sure that they get the most out of it.
3. Fundamental Analysis
Another popular strategy, Fundamental traders look at indicators from the macro and micro levels. They either look for changes in the general economy or they look at other currency values.
They are the more patient traders out there because they will have to look at many data before they will initiate their trades.
4. Technical Analysis
Just like the fundamental traders, the Technical traders make use of technical analysis before they conduct their trades. These people look at different graphs, charts, and other key factors to determine how the price will move in the near future.
A lot of people actually like this strategy a lot because although there is a lot to take in, the data that you look at are based on past market movements. Other things that technical traders look for are mass market psychology, supply and demand, and many more.
5. Position Trading
Position traders are usually the more patient ones and they are also the ones who will only trade in small sizes to take more advantage of large price movements. Remember, they also rely on price movements over a longer period of time compared to the other strategies.
The good thing about position traders is that they make use of both fundamental and technical analysis for their trading plan. This means that all they do are based on real and factual data as opposed to rumors and hear says.
Forex Trading involves the buying and selling of currencies and it is indeed a market in and of itself. Since price movements are relative, meaning, they’re not constant, a trader should make use of strategies that will give them the edge over the others.