For this strategy, we will use the Exponential Moving Average (EMA) indicator. The previous week's last daily candlestick has to be closed at a level above the EMA value. Now we have to look for the moment when the previous week's maximum level was broken. Next, a buy stop order is placed on the H4 closed candlestick, at the price level of the broken level.
Day trading - These are trades that are exited before the end of the day, as the name suggests. This removes the chance of being adversely affected by large moves overnight. Day trading strategies are usually the perfect forex trading strategies for beginners. Trades may last only a few hours, and price bars on charts might typically be set to one or two minutes. The 50-pips a day forex strategy is a good example of a day trading strategy.
However, it's important to note that tight reins are needed on the risk management side. These Forex trade strategies rely on support and resistance levels holding. But there is also a risk of large downsides when these levels break down. Constant monitoring of the market is a good idea. The market state that best suits this type of strategy is stable and volatile. This sort of market environment offers healthy price swings that are constrained within a range. It's important to note that the market can switch states.
The main categories of forex strategies used by traders include: Fundamental Strategies, Technical Strategies and Popular Strategies. Fundamental forex trading strategies are dependent on the fundamental economic indicators of a nation and other political events that happen in a nation. Technical forex trading strategies rely on the statistical and mathematical models of the currency prices and the analysis thereof. Popular trading strategies are always a combination of the fundamental and technical analyses.
This strategy is employed by forex traders as a long-term plan to make the trades profitable. The indicator mainly uses the ‘Pullback’ and the ‘Trend’, both of which are fundamental in nature. In order to have a complete understanding as to how this strategy works, traders must be familiar with the more fundamental concept called ‘the trend’. It is very difficult to explain each individual price change and determine a pattern as there will be many of them. Traders need to look at the bigger picture in order to see trends. The three key Fibonacci numbers that traders should always remember are 0.382, 0.5, and 0.618. They should also keep in mind 0.764 and 0.236.
This method is all about analyzing important news happenings on different fronts in a nation and understanding the implications that they will have on the currency market. The trader will then place the trades accordingly. The market moves in an unpredictable manner when there are sudden political or economic happenings in any nation. As the forex market operates round the clock, news flows in from all parts of the world. Trading on the basis of economic news and data suits all kinds of traders wherever they are and whichever currency they choose to trade.
This article outlines 8 types of forex strategies with practical trading examples. When considering a trading strategy to pursue, it can be useful to compare how much time investment is required behind the monitor, the risk-reward ratio and regularity of total trading opportunities. Each trading strategy will appeal to different traders depending on personal attributes. Matching trading personality with the appropriate strategy will ultimately allow traders to take the first step in the right direction.