In simple English, a Forex strategy means the system employed by the trader to figure out the best time to buy or sell a currency pair. As you probably know, Forex trading requires plenty of research and this is why the most successful Forex traders are the ones who take their time to do exhaustive analysis. Below are some of the top Forex strategies for smart traders.
Price Action
This is one of the most popular Forex strategies out there because it works and it relatively easy to use. The principle of price action makes it clear that certain currencies behave in a certain way at certain times of the year. in effect, using price action as a trading strategy simply means using the history of the currency to make informed decisions. For instance, it is believed that the American dollar falls against certain major currencies in the summer. It follows that currency traders can apply this knowledge and make successful trades every summer. The best thing about this strategy is that you can use it as a stand-alone strategy or you can use it in conjunction with other strategies.
Current News
A smart Forex trader does have to rely on technical analysis all the time. Sometimes, making money in the currency trading world is all about being pragmatic and sing your common sense. the current news strategy is an effective one because the currency market is affected international news, government policies and developments in politics and economics. As a trader, you should not always enter the market immediately without waiting to read the news and see how it affects the Forex market. The simply trick of connecting significant events in global politics can help you make successful trades. For instance, if the American economy is doing well because of current government politics, this is an indication that the US dollar will rise. On the other hand, if Japan is facing an economic crunch, it means the Japanese Yen will probably fall. Use this information the right way and you will make money in the currency market.
Trend Trading
Trend trading is a wonderful strategy but you need o understand how to spot an upward trend and a downward trend. There are times a particular currency can go on an upward trend. There are times the same currency can go on a downward trend. You can use the previous history of the currencies in question to spot the beginning of an upward or downward trend. With this information, you can easily make money from trend trading. The best thing about trend trading is that it gives many opportunities to make money. In addition, this strategy usually gives you a favorable reward ratio.
Scalping Strategy
This strategy makes a lot of sense for the trader who wants to take small profits on a regular basis. Forex scalping simply means taking several opening and closing position on a given day. Once you see an opportunity to make a little profit, you enter the make your money and run with your cash. The profits might not be that much but when you put all the small margins together, it adds up at the end of the day.
Final Word
There is serious money in Forex trading. Figure out the right Forex strategies and you will make successful trades consistently.