Forex Trading Strategies
Forex Trading Strategies
In Forex, traders try to make profit by buying or selling currency pairs based on speculations regarding where the exchange rate is heading for. While speculations come from different sources, the final idea usually results from trading style which could be determined by the following aspects:
- Experience and knowledge
- Risk tolerance
- Profit targets
- Time horizon
- Discipline and personal skills
However, there are methods and techniques to increase your chance of success. They are usually referred as strategies and the name makes sense since they are really "strategy" to implement a plan for achieving specific goals: to maximize the chance of taking profit and limiting loss.
These strategies are usually categorized base on the main concept behind them. For example, strategies based on "Fundamental Analysis" use economic news and data to determine sources of supply and demand forces while strategies based on "Technical Indicators" or "Chart Patterns" are often useful to assess the strength of those forces.
It also worth noting that for implementing a plan there is no contradiction in using different strategies from different categories. For example, you may decide to buy a currency because:
- Its central bank is to raise the interest rate – (fundamental strategy)
- but you prefer to wait in order to buy it at a support level – (chart pattern strategy)
- and when the RSI is below 30 – (technical strategy)
Finally, remember that all these methods are designed and developed to provide a trader with a bigger "chance" of success. It means that none of them grant profit. You need to test strategies yourself and determine figure out which strategies suit your trading style and personality best.
