Forex Trading is also one of the type of investment strategy. Here in the forex trading the investors play a major role in identifying the exchange rates of different countries. Once the identification is done they will buy the currencies which are undervalued. After the process of purchasing is completed then, the investors exchange the currency which is bought by the one which gives a higher profit.
The plan of action which is made for achieving the goal in the market of foreign exchange is called as the Forex strategy. These plans are useful for tracking the tricky and the risky market.
The strategies which are being planned can be basic, simple , advance. For the beginners the basic forex strategy is being used. Some of the basic rules are being defined in the basic forex strategy for the beginners. Coming to the next stage of the beginners called the skilled beginners the simple forex strategy is used. They define the trading techniques. The other strategies also help the traders to get information about the trading.
The different types of Forex trading strategies are as follows.
All the forex strategies may not be perfect always. And they may not be accurate always. Hard work and the practice towards the strategies is important for any forex trader. The main constituents of Forex strategies are the technical analysis and the fundamental analysis.
The technical analysis is based on the charts and the movement of the market is being analyzed using the mathematical formulas. Booming region and the depression region are also identified using the Forex market. In the fundamental analysis the analysis is being spread around the world and here the economics of different countries are being analyzed.
Some of the best strategies which the professional forex traders use are:
- Scalping Strategy: It will give the steady repeated profits although it seems as a downside. This strategy gives low margin of return with regard to the low risk.
- For moving towards the second strategy, first the trader should get a currency pair position. After getting the position in the currency pair the buy or sell stop order of the trade is being done. Based on the change of the pair,there will be profits or the losses. For getting the profits, just follow the market trend. The trends can be observed by using the pivot point. Always keep a view on the market of forex. Based on the directional bias, you can place the short term or long term position .
- Three day rolling pivot system is the another strategy. Here the rolling pivot range, will be considered as the point of reference for both the entry and exit trades. It shows how to stop the winning trade while it is changing into the losing trade. It also represents how to exit the trades when it is loosing.
These are some of the strategies which help in growing the consistent profits of the professional trader.