Forex Trading strategies To understand market strategies is not a piece of cake. It depends on people how well their understanding about this business is and how well they can catch up new techniques to make it successful. If you have the correct information, half of the job is done. Depending on the requirement people choose their forex trading strategy in the foreign exchange market. People, who are capable to analyze about what they need and what they are actually getting, can definitely perform well! The same applies with forex trading strategies. Choose the one which could satisfy not only your requirements but could suit your personality and trading style. Trend based trading strategy Because of the high amount of risk in this forex trading strategy, we should not take risk more than 1.5 to 2.5 % of our capital on any single trade. This ensures that even if you are on the losing side, you are not out bankrupt. When you have higher lows in an uptrend or lower lows in a downtrend, trend strategy is being used. Now let us see how traders profit from trend trading. Let us take an example in which a trader has $5000 in his/her account and is using a very strict stop loss of 20 pips. Now what happens is that the trader might be out of the trade for the first few times when the stop loss has been reached. But next time if he has kept a proper position for a large move on a particular currency pair, and then the currency pair rose more than 12%, he might actually double his/her account balance in a short period. Range based trading strategy Let us take an example to understand this forex trading strategy. The quote for EUR/USD pair is 1.5000. What a range trader does is that, he/she will sort the pair at that very price and on every 50 pips higher that the current one. It buys the occurrence back when the value goes every 25 pips down. We already know that the only assumption that a range trader follows is that the pair is likely to return back to its original value, i.e. 1.50000. If EUR/USD rises to 1.5500 and comes back to 1.5000, the trader will have a good profit and this profit increases if the currency value oscillates between 1.5000 and 1.5500. Intraday trading strategy The best thing about this forex trading strategy is that even if you face a series of losses, it isn’t much and very much bearable. The series of small profits eventually leads to a big sum at the end of the day. No matter what ever the condition of the forex market is, a day trader trades in both the directions. Now the question arises that how much time a forex trader should spend in a day and are there any peak hours when trading is most profitable? It all depends on the trader which time he prefers to sit in the day. There are no specific hours that you should trade to have profit in the forex trading. The peak days when forex trading can be of good profit are Mondays and Fridays. There are gaps in the trades on Monday due to Saturday and
Sunday. Hence if any significant event occurs over the weekend it might be of good profit. Moreover, traders need time to observe the market in the beginning of the week. On Fridays, there are lots of transactions happening due to the fact that most traders will finish off their trades and won’t leave any open positions over the weekends. So trading on Fridays can be fruitful! Happy forex trading!