Forex strategies are employed by traders to make sure that they have an edge in the market. This is dependent on the personal analysis of the trader, and execution of the investment. There is risk involved, and there is no doubt about that, but if strategies are implemented properly, they can help a lot.
PRICE ACTION TRADING
This is the strategy where you study historical prices to form plans in the market. It is good for all periods, and this is the ability that makes it more preferable to many traders. The strategy always waits for the price to come, but in rising markets, this may not be a case.
RANGE TRADING STRATEGY
This strategy is one of the favorites and works well in a market. The primary task is to identify support, and resistance points. The strategy has a favorable risk-to-reward ratio, and a decent number of trading options, but requires a time investment.
TREND TRADING STRATEGY:
One of the best things is that this strategy is employed by all traders. It doesn’t limit according to the experience. The general preference is to medium and long-term. There are a lot of trading opportunities and a good risk-to-reward ratio. However, it requires a lengthy time investment.
This is a strategy that is not meant for the short term but developed for the long-term. It can also be applied to the Stock market, and small fluctuations are not taken into consideration. It has very few trading options but has a high risk-to-reward ratio.
DAY TRADING STRATEGY
This is the most popular strategy. You simply trade financial instruments in a day and close before the day. The risk-to-reward ratio is medium, but there are a lot of trading opportunities. It requires a lengthy time investment. Entails strong appreciation of technical analysis
FOREX SCALPING STRATEGY
In this strategy, you gain small profits frequently. You open and close multiple positions in a day. There are a lot of trading opportunities, but it has a low risk-to-reward ration and requires a lengthy period.
This is not very popular but is one of the main strategies employed by the traders. The task is to take advantage of the range-bound, and trending markets. The risk-to profit ratio is medium, and there are a decent number of trading opportunities. However, it involves technical analysis and a long time investment.
CARRY TRADE STRATEGY
In this strategy, a currency is borrowed at a lower rate, followed by investment in another currency that is at a higher rate. This will result in a positive outcome. There is a medium risk-to-reward ratio, and little time investment, but trading options are limited, and extensive knowledge about the forex is required.
Every strategy matters, and appeals differently to each trader. To apply a strategy, you must have extensive knowledge about the market, and understand the paradigms that affect it. Make sure you have researched enough to be investing.