Forex Trading Strategies
1.
Overview
2. Trading on the Technical 3. Trading on the Fundamentals 4. Trading When the Indicators Conflict 5. Trading Discipline
Overview ď‚— The idea of listing the strategies or trading guidelines
is to create the equivalent of policies and procedures manual for trading.
ď‚— By defining your strategy before you enter into a trade
that will help you to prevent emotion taking over your trading.
Trading on the Technical Technical's refer to the use of charts and graphs to
identify potential buy and sell levels.
Traders who employ those tools are often called
"chartists."
An Introduction to Technical Analysis for more
information on technical trading.
Trading on the Fundamentals ď‚— Trading on the fundamentals also referred to as
trading the news is the study of news events and economic statistics to determine the trading opportunities.
ď‚— Referred as fundamentalists, these traders pay close
attention to changes in the economic indicators such as interest rates, employment rates and inflation.
Trading When the Indicators Conflict ď‚— It is a fact of trading that there will be times when you
will face conflicting information as you evaluate the likely the future direction for the particular currency.
ď‚— When faced with the contradictory information, you
have two options:
ď‚— 1. Formulate the own opinion as to the direction the
exchange rate will likely go.
ď‚— 2. Simply refrain from dealing in that currency pair
until a clearer picture emerges.
Trading Discipline The Successful trading needs the discipline to stick to a
strategy.
No matter the market direction, the worst thing you can
do is act rashly, and without thought this only exaggerates losses.
If you entered into a trade based on your best analysis
available to you at the time and the trade still goes against you, it may be the best to cut your losses and move on.
ď‚— While no trader likes taking a loss, just randomly
buying and selling on every market change is not the trading strategy. It is a sure way to lose money.
ď‚— While we are on the subject of losing money,
incorporating stop-losses into your orders can help protect your investment.