Alternative Ways to Trade Forex

Forex Strategies

Surely as a beginner trader and not so beginner, you are looking for the super winning Forex strategy that results in each and every one of your operations.  We are going to save you time, this super strategy does not exist!

To learn Forex, first you must analyze your profile as an investor, that is, if you like risk or on the contrary, you flee from it and based on this, determine a set of strategies that can work and we say they can because:

The success of a trading strategy is never guaranteed.

What may work for someone else can be a disaster for you.  On the contrary, the Forex strategy that has been discarded by others could be the best for you. Therefore, experimentation is necessary to discover the Forex strategies that work best for you.  Vice versa, you can discard those that don’t work

The best Forex Trading strategy includes a set of analysis tools that currency traders use to determine their buying or selling decisions at a specific time. They are used to streamline the process of analyzing this information by creating a set of rules, or a methodology, to make a trading decision.

FX Trading Strategy – Trends

Sometimes a market breaks out of a range, moving out of resistance to start a new trend…  How does that happen?

When support breaks and the market moves to new lows, buyers wait for these new lows to settle. At the same time, there will be traders who sell in moments of panic or are forced out of the position.

The trend continues until the sale runs out and buyers regain confidence that prices have reached their new low.

Trend following Forex strategies buys the market once the resistances have broken and sell them once the levels have fallen below supports. Trends can be short term and also long.

Due to the magnitude of the movements involved, this type of system has the potential to be the most successful strategy in Forex Trading.

Trend Trading Strategy – Breakout

Sometimes markets move between support and resistance bands. This is known as consolidation.

A breakout will occur when the market moves beyond the limits of its consolidation, towards new highs or lows. For this new trend to happen, a breakout is essential.

Therefore, breakouts are seen as potential signs that a new trend has started.

But the problem is that not all breakouts lead to new trends. In Forex, even such a simple strategy should consider risk management, since it minimizes your losses during a false breakout.

A new high indicates the possibility of an upward trend starting, on the other hand, a new low indicates that a downward trend is beginning. So how can we get an idea of ​​the type of trend we are entering?

The length of the period can help determine the highest maximum or lowest minimum.

A breakout past the highest maximum or lowest minimum over a longer period will suggest a longer trend.  A breakout in  a smaller time frame will indicate a short-term trend.

Lateral  Forex Trading Strategies

Counter-trend or lateral Forex strategies are based on the fact that most breakouts do not develop in long-term trends. Therefore, the Trader using this simple Forex strategy seeks to gain an advantage over the previous trend that establishes the minimums and maximums.

In theory, the counter-trend strategy is the best Forex strategy to increase self-confidence since it has a very high success rate.

FX Trading Strategy – Carry Trade

It is very important to know this strategy, since it is well known among the most professional traders, so it is not purely a Forex strategy for beginners. Best of all, it is easy to implement and understand.

The essence of the carry trade is to try to profit from the difference between the returns of two currencies.

Inertia is your friend with this strategy in which you are looking for a currency pair with low volatility.  In addition, it is also important to note that leverage will end up increasing losses if you make a mistake.

This strategy works well in times of increased risk appetite, as investors tend to seek higher-yielding assets. Actually, the action of traders who implement this strategy can support it because the more people use this strategy, the greater the selling pressure on the financing currency.

The Forex Trading world is full of strategies and tools that will aid your path to success, you just have to find the right one for you!

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Discussion

  1. Rick N.

    I am new to Forex trading so I am trying to learn as much as I can to really invest in it full time. This was very helpful for me. I knew of some of the alternative ways to handle Forex trading but I didn’t know them in great detail. Going to check out other articles and bookmark the site.

  2. Daniel

    Great article. Could you please write about the best cfd brokers to trade with? Thanks

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