There are numerous Forex trading strategies that can be utilized by beginners intermediate and advanced Forex traders. This article will not go into the details on each type of strategy. That would take an entire book’s worth of pages. Rather, this article will focus on three simple trading techniques.
Short Term Forex Trading Strategies
The rationale behind this approach is the liquidity and sheer amount of money that is traded in the currency market. This means that if you play your cards right you only need to wait a few minutes from entry to exit. This is repeated several or even dozens of time for each trading day.
The advantage of this approach is the fact that you do not get bored, the mere movement of entry to exit repeated several times a day stimulates the trader. A disadvantage of this trading strategy is the fact that it usually yields minimal profits per trade, hence the need to repeat the process. This would not be a problem if you are always winning on each trade. Some of the more basic short-term techniques are as follows:
- 5 minute chart trend lines
- short term moving averages
- short term divergence
Mid Term Forex Trading Strategies
This type of strategy usually lasts for a couple to several trading days (10 to 50 days on average). Within these trading days movement will be made at specific intervals of time. The main advantage of this trading technique is the fact that you get more raw data before you actually make your move. This allows a trader to speculate less and analyze more.
A problem with midterm trading strategies is the fact that profits are still negligible and that the entire strategy must push thru from start to finish, a wrong step in one trading day can mean you just ruined a week of your time and budget. However, a lot of experts are of the opinion that midterm strategies are still better than short-term strategies because the former still relies on analysis and proper execution while the latter tends to rely on speculation. Some of the more basic midterm techniques are as follows:
- 50 day moving average
- Historical data charts from the previous 10 to 50 days
- Midterm divergence
Long Term Forex Trading Strategies
This strategy is meant for maximum profits but does not necessarily mean less effort. This is because while you are not moving for long periods of time you actually make use of historical data lasting several weeks prior, before taking a position. You then continually read the graphs to determine whether or not to proceed with your long-term strategy or abandon the same via a stop loss order. The main disadvantage of the same is that it requires the trader to drop liquidity in favor of long-term profits. The main advantage of the same, as mentioned earlier is that profit margins are generally higher. Some of the more basic midterm techniques are as follows:
- Macro Trading
- Carry Trade
- Technical Trading