Forex Trading Strategies and Techniques.


Forex in short means Foreign Currencies Exchange Market. This is said to be the largest and most liquid market of the entire world today. Some Trillions of Dollars are traded every day making this market very extremely popular. This factor makes the Forex market the first choice over stock markets.

The liquidity of this market gives us the impression that it is filled with opportunities. Yes it is. An investment of $1,000 can give a return of $100,000 or more. But remember this market is a large black hole which can suck in the entire investment in no time. I am saying this because 95% of traders in Forex lose their investment. Around 5% make it the winning line. How to be in the winner’s club? This is the theme of this article.

If Forex trading is considered risky then why trade in Forex? There are some positive sides to the Forex Market. This is one market where you need not find a product to sell. The product is readily available. You need not advertise the product, because it is well known to everyone. All what you need is some knowledge and experience. These are the two important factors, when it comes to be a successful Forex trader.

Knowledge is something that the trader can gain by reading articles related to Forex. The trader can further expand his knowledge by studying Forex charts. Learning to read charts can give an in-depth vision in Forex trading.

Experience can be gained from doing demo trades. Nowadays many Forex trading houses give free demo accounts. These demo accounts do not vary with real accounts. It is very important that a person who wants to be a trader does lots of demo accounts and familiarize himself. Demo accounts do a great job in training a person to be a clever trader. There are lots of potholes in Forex trading. One thing I would like to mention is the leverage or exposure offered by trading houses. If a trader has $1,000 in his account he could be trading more than $100,000 worth of trades. Now this is where the problems begin. If the trader is clever and experienced will know to use these leverage and convert them into profits. If not he faces the danger of losing his capital.

What are the strategies that could save an investor’s capital? 

The first lesson or rule a trader should learn is there is no strategy or trading system that can rain money does exist. Even if a trader finds or adapts a successful trading plan or strategy, at some stage it is also like to fail and disappoint him. This is very important thing to remember because most of the traders are always on the lookout to find new ways of trading. The reason is they want to get rich in the shortest possible time so that they can retire early. Therefore the first rule is to forget looking for a 100% winning system. Trading is very risky. At the same time it is also very profitable. There is no reward without risk in any activity.

What is essential for a successful Forex trading? I have mentioned few basics below which might be useful for a new candidate. The use of complicated trading system should be avoided. Too many entry or exit rules can actually make a trader confused and stay away from the market. Therefore the trading system should be simple as possible. In reality simple trading systems carry better chance of success.  A system comprising Moving averages, breakout Points and Support and Resistance can be an example for a simple trading system.

A trend following method makes the trader is on the right side of the market. Looking for small profits may be good but the trader should be looking for larger profits. That must be the goal of Forex trading. Looking for break outs is one good way of trading the Forex market, because traders usually have made huge profits trading them.

Looking for a long term trend is another way of Forex trading. Long term trend means having ten to fourteen days. However this method needs some market analyzing capability.

The Forex trader should combine money management strategy, which is probably the most essential part of Forex trading. The loss should be cut to the manageable limits. With cash in hand, the trader will be in a position to enter trades whenever the opportunities are found.

And finally I would say, the forex trader should have patience. This is also known as time management. Quick exit can drastically reduce the trader’s profits, and the very purpose of trading Forex will be in question. With a proper mindset and simple methodology the Forex trading could be an exciting venture.

Happy trading.











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