Monday, January 23, 2017

THE COMPLETE GUIDE FOR

FOREX TRADING STRATEGIES

Forex Trading Strategies

Forex Trading Strategies

Countless forex trading strategies were invented over the years, and some rely on the technical use of charts and numbers. Others rely on a fundamental understanding of the market with reference to current events. And yet, some strategies have become popular while others are only used by a minority of traders. These trading strategies range in different levels of complexity. We will now discuss some of our expert’s favorite strategies - starting with a rather simple one and moving up the scale in complexity as we continue.

In this section of our website, we present you with a wide range of forex strategies and explain in detail how they work and how you can use them. We have divided this section into four sub-categories which become visible if you place your mouse cursor on the ‘Forex Strategies’ section on the top left of our main page without clicking on it. The four sub-categories are: 

  1. The fundamental forex strategies for trading based on fundamental events and how they affect the forex market.
  2. The technical forex strategies for trading based on technical (mathematical and statistical) analysis of the forex rate charts.
  3. The popular forex strategies section contain forex strategies based both on fundamental and technical trading. You’ll find here the most crucial strategies for your forex career and therefore they are in a different section.
  4. In the forex strategies articles section you’ll find information on implementing the best forex strategies in your forex trading process: stuff like risk management, matching guides between a personality type and the relevant trading strategies, etc.

 

Carry Trade - Forex Trading Strategies

Carry trade is a Forex trading strategy that is very different from other Forex trading strategies in the way that it operates. All of the Forex trading strategies that we normally use are based on the concept of buy low/sell high as the basis to all Forex trading.

Trading the News - Forex Trading Strategies

So far we have discussed many Forex trading strategies that allow us to analyze the price action from many different angles. These strategies give us the technicals but there's one factor that always has the potential to make all of the technicals irrelevant and just take the market in every way that it likes. Big announcements or news coming out of different countries can have a huge effect on the market, rendering all our analysis meaningless.

Trading The Majors in 2015 - Forex Trading Strategies

Big investors, hedge and pension funds as well as good traders lay out plans and strategies in advance, usually before the quarter or a new year begins on both, fundamental and technical outlook. So we are suggesting a strategy to figure out 2015 in advance. I know that there are many factors to take in consideration which might affect the financial and especially currency markets, some of them can´t even be anticipated, like conflicts, natural disasters etc. Still, we have to prepare ourselves as best as we can with whatever is available to us.

 

Trading the Market Sentiment - Forex Trading Strategies

Market sentiment is the momentum of the market. All traders, small or big, have an opinion when trading in the Forex market. Some might be bullish and some might be bearish. The market sentiment is all their opinions combined, even yours if you are trading. 

How To Turn Volatility In Your Favour - Forex Trading Strategies

The forex market can be very volatile. But we can turn the volatility in our favour with certain trading strategies, such as widening targets, low leverage, portfolio diversification, minimize risk etc.

Arbitrage - Forex Trading Strategies

Arbitrage has been occurring since ancient times. Arbitrage is more of a speculation strategy, where someone attempts to profit from market inefficiencies and take advantage from price differences of the same instrument either on the same market or on different markets. Finding the right conditions and applying an arbitrage strategy is not easy because everyone is looking for that little loophole in the market in order to make a profit.

Fair Value - An Efficient Way of Trading Currencies - Forex Trading Strategies

Fair value strategy shows which one of two economies is in the best shape. You evaluate and weigh each sector of the economy to see the performance of the whole economy.

Fibonacci Indicator - Forex Trading Strategies

The ‘Fibonacci indicator’ Forex trading strategy is one of the most well known and commonly used long term Forex trading strategies. This method relies on what is called a ‘Pullback’ and to fully understand how it works we must discuss the more fundamental concept ‘the trend’. When we look at each price change individually it is very hard to explain them and find a pattern as there are so many of them.

Horizontal Levels - Forex Trading Strategies

Horizontal Levels is one of the simplest ideas in Forex trading and yet a very useful Forex trading strategy. Horizontal levels are fundamental in most Forex trading strategies and aid us in analyzing charts but can also be used on their own as a strategy rather than a tool to use for other strategies.

Divergence - Forex Trading Strategies

Traders and analysts of the financial instruments, apart from the fundamentals, use a number of indicators to figure out what might happen next to the price of a certain instrument. These indicators offer a simple method of recognizing patterns and predicting which way the price will trend next. The use of these indicators is what makes Forex signals possible as they allow for a real-time analysis of the price action and our analysts here at FXML use them all the time.

Candlestick - Forex Trading Strategies

Candlestick charts are the most common chart types used by retail traders and investors. There are other types of charts such as line charts, bar charts etc., but they don't tell the story of past price action like candlesticks do. When trading is based on technical analysis, the decisions for future price action are made based on how the price has reacted in the past. I find candlesticks to be very useful and they are one of my favorite indicators. They work almost perfectly in volatile times, but even in less volatile times they work pretty well if used in combination with one or two other indicator.

Triangles and Wedges - Forex Trading Strategies

We have covered most of the important technical chart patterns in our strategy section during 2015. There are still some strategies left though. “Triangles” and “Wedges” are two of the 10 most important chart patterns and in this article we´ll explain how to trade them.

ADX (Average Directional Index) - Forex Trading Strategies

How many times have you entered into a trend only to find out that it has already run its course and you were too late? Many of the Forex trading strategies that we use help us predict which way the market is trending and whether to expect a bearish or bullish trend, but give little or no indication as to the strength of the trend.

Trading with Ichimoku - Forex Trading Strategies

The Ichimoku Strategy is an abbreviation of the Ichimoku Kinko Hyo, which was developed by a Japanese journalist named Goichi Hosoda in the 1960s after 30 years of working within this indicator. This technique has been popular in Japan for quite some time now and it has gained popularity in other parts of the world as well. Ichimoku Kinko Hyo means “instant look at the balance chart” if you literally from Japanese.

Head and Shoulders - Forex Trading Strategies

We already discussed ‘Candlestick Trading Strategy’ which allows us to understand the candlestick charts and what each candlestick indicates. But in order to really become a master of the charts we must learn about a few common patterns that can be formed on the charts and what information we can draw from them about the future.

Hedging - Forex Trading Strategies

Traders of the financial markets, small or big, private or institutional, investing or speculative, all try to find ways to limit the risk and increase the probabilities of winning. There are many Forex trading strategies out there and hedging is one of them. In fact, hedging is one of the best strategies to do just that, that's why many large institutions use it as a mandatory component of their tactics. There are even investment funds that are named after this strategy, because they 'hedge' most of the trades and that's why they are called 'hedge funds'.

Elliot Wave Theory: The Background - Forex Trading Strategies

Having nothing in particular, to fill his days, Elliot turned his attention to the stock market behavior and developed his theorem in later stages of life. Born an accountant, but retired at age 58 after catching a virus from a trip to South America. This is one of the oldest trading strategies, first published in 1938 as a book under the name ‘The Wave Principle’. Until that time, the general concept was that the market behaved in a chaotic manner and there were not many trading strategies if any existed.

Trading with the Elliot Wave Theory: Part 2 - Forex Trading Strategies

In the previous article we published an article where we explained how the Elliot Wave Theory was developed and how it worked. When used alone as a principle it’s useless unless implemented in everyday trading. So this week we will explain how to trade with the Elliot Wave Theory (EWT), after all that´s what we need it for.

The Importance Of Liquidity In The Forex Market - Forex Trading Strategies

Liquidity has been an important factor since ancient times and it continues to this day. A person, company or a country can be very wealthy but if they don´t have enough liquidity or liquid assets they can bankrupt easily. Very often we hear about liquidity or the lack of it, especially during the 2008 financial crisis.

How to read and trade the price action - Forex Trading Strategies

Trading can be as difficult or as easy as you make want it to be. Indicators and trading strategies can make trading much easier, and knowing how to read the price action is one of the most useful ways to trade. This type of analysis was first introduced by Charles Dow who laid the foundations for the technical analysis, but it has been developed and advanced remarkably since then. Understanding the price action gives you that extra edge you need to get over the profit line. 

How to Trade Profitably in Volatile Markets - Forex Trading Strategies

Trading in a volatile market is dangerous but there are huge profit opportunities. In order to be profitable you should pick the big levels, go with the flow and increase your targets.

Multiple Time Frames - Forex Trading Strategies

“Multiple time frames” is a Forex trading strategy that works by following a single currency pair over different time frames. We have already seen that by following the price chart we can depict the highs and lows and establish the overall and temporary trend. However, by looking at the different time frames we can see changes and patterns that we were not able to spot by using just one time frame.

Scalping - Forex Trading Strategies

Many novice traders find scalping to be a very appealing forex trading strategy. The scalping strategy is an 'intraday' trading strategy and it allows for a successful trader to make a lot of money in no time. It is so appealing because it is a relatively low-risk strategy and can yield very big profits. Although scalping is considered low-risk, it relies on an attentive trader and can be compromised if emotions can get in the way.

Support and Resistance Levels - Forex Trading Strategies

A good way to understand this Forex trading strategy is to picture a man trying to get past a certain line but a fence is blocking his way. He will keep going along the fence but will not be able to pass it. That fence represents the “support and resistance levels”.

Trend Trading - Forex Trading Strategies

How often have we heard the expression “The trend is your friend”? Well apparently not enough, because trading alongside the trend is one of the safest ways to trade and a great Forex strategy for maximizing profits. FXML’s top analysts use trend trading as one of their leading trading strategies and always check which side of the trend they are on before making a trade or signal.

Trading Moving Averages - Forex Trading Strategies

As traders, we have to take into consideration many things. We have to implement different factors and indicators in our analysis in order to succeed in this business, no matter if you trade short or long term. These might be fundamental indicators, technical indicators, or both.

Trading the Central Banks - The Rhetoric - Forex Trading Strategies

The comments of the Central Banks set the tone of the market. You can trade the comments by scalping, short-term trading and/or long-term trading.

Trading the Central Banks - The Actions - Forex Trading Strategies

Trading the Central Banks can be very profitable. The main strategies are trading the expectation, the knee-jerk reaction and the main event.

Risk (Money) Management – Part 2 Developed Techniques - Forex Trading Strategies

In this article we will explain the techniques that have been developed by traders, economists and analysts, which can be a bit more complicated, but it is essential to understand and make them part of your trading in order to minimize the risk.

Plan Ahead Your Forex Trading Strategy For 2016 - Forex Trading Strategies

Currently the global economy is pretty weak and the safe haven currencies are benefiting. We expect the economy to pick up by mid-year and the risk currencies will start to strengthen.

Trader Personality - Part 2 - Forex Trading Strategies

Impulsive and conservative traders must match their strategy. Scalping and news trading are for the impulsive, while trend trading and hedging are for the conservative type.

Risk (Money) Management Part 1 - Common Sense Tactics - Forex Trading Strategies

In part 1 of this Risk (money) management series, we discuss common sense tactics that each trader should be aware of. These include Leverage, Risk/Reward ratio, exposure to trades, and keeping up-to-date with information, etc.

Trader personality Part 1: discovering your trading personality - Forex Trading Strategies

The trader’s personality is very important. You must discover your trading personality before choosing what trading strategy to use.

Creating a trading plan- Part 2 - Forex Trading Strategies

A little while back, I wrote about how to build a trading plan. The trading plan is very important so we thought it would be better if we only published half of it, the first part. It would give you some time to practice the first two steps, your available funds and your available time. This week we are publishing the second part of the trading plan with the two remaining steps.

Creating a trading plan - Part 1 - Forex Trading Strategies

We have heard many times that new forex trader's fail 95% of the time. That’s because many beginners start trading without a clear plan. A premeditated plan is crucial when you trade. It´s like going to war without an attack and a defense plan. Before you go into a battle you assess your capability, your strengths and your weaknesses. The same logic applies to Forex, you prepare a plan that helps you base your trading on your strongest features and avoid the weak ones.

How to Trade Forex in a New Environment - Forex Trading Strategies

The environment has changed in the last two years and the volatility has increased immensely. So, we must change our forex strategy as well and widen the targets to avoid whipsaws and to give our trades breathing room.

Planning Your Trading Strategy For April - Forex Trading Strategies

All financial instruments have certain behaviour during certain months. The USD is usually weak during April months in the past... while the GBP is particularly strong. But will they follow similar patterns this April?   

The Right Strategy in an Irrational Market - Forex Trading Strategies

Trading Your Logic or Trading the Market? Sometimes, the price moves stubbornly against the technical and fundamental analysis. We can still trade profitably, either by going  with the flow with short-term forex signals or against it with long-term trades.

How to Protect Your Account (and Avoid Gambling Forex) - Forex Trading Strategies

Some people with obsessive personalities become obsessive traders when they trade. That´s obviously not the right way to trade but there are some techniques and forex strategies to help them overcome this “pathology”.

Trading forex according to your available funds and time - Forex Trading Strategies

Many forex traders have limited funds or time which can be an obstacle.  But there are trading strategies suitable for these forex trader types, which help them overcome the battle.  

Understanding Forex and Letting the Market Guide You - Forex Trading Strategies

Recently, we have seen a lot of irrational price action in the forex market. But the market always hints which direction it wants to go, so during these times, it´s better to let the market be your guide.   

Trader Psychology - Applying Your Strategy - Forex Trading Strategies

We know the importance of the strategy but the implementation is just as important. If you apply your strategy in the right way you will succeed, if not you´re bound to fail.

Drifting from the EU: Brexit, Grexit, and How it All Affects FX - Forex Trading Strategies

The British people voted whether to stay in the EU or not on 23rd of June. This move has great implications for the Pound prior and after the referendum, as well as the Euro.

Reading the Interest Rates - Forex Trading Strategies

The central banks shift interest rates to help the economy and inflation. But these moves have a great impact on the forex market and related currencies.

Long - Short Hedging Strategy - Forex Trading Strategies

Hedging consists of going short and long on two positively correlating forex pairs. Man Group uses this forex strategy with great success.    

Keeping a Trading Journal - Forex Trading Strategies

A trading journal highlights all your successes and your failures. By keeping a journal you can avoid repeating mistakes and increase you performance.

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