Forex trading strategies are the methods used by forex traders to make profitable trades. There are many different forex trading strategies, but the most common ones involve buying and selling currencies. Other popular forex trading strategies involve buying and selling stocks, commodities, or other investments.
Top 6 Forex Trading Strategies
The goal of forex trading strategies is to make money by buying currencies when they are low and selling them when they are high. Many forex traders use technical analysis to help them make these decisions.
Trend Following
Trend Following is a trading strategy that involves following the trend of a security or commodity. The theory behind this strategy is that by doing so, one can make more profitable trades than if they were to try and trade against the trend.
There are a number of different ways to implement Trend Following, but the most common way is to use a moving average crossover strategy. This involves using two different moving averages to determine where the security or commodity is likely heading. Once you have determined where the security or commodity is likely headed, you then buy or sell accordingly.
Mean Reversion
Mean Reversion is a charting technique used in technical analysis that predicts the direction of prices. It is the tendency for prices to return, over time, to their average value. This theory has been demonstrated in many different markets and currencies.
Fibonacci Retracement
Fibonacci Retracement is a technical analysis tool that can be used to identify oversold and overbought areas in a market. The Fibonacci retracement tool uses the Fibonacci retracements of previous peaks and valleys to identify potential support and resistance levels. If the current price is below the lower Fibonacci retracement level, then investors may consider selling securities. Conversely, if the current price is above the upper Fibonacci retracement level, then investors may consider buying securities.
Hammer and Tilt
Hammer and Tilt are two trading strategies that are used in forex trading. Hammer strategy involves selling the currency when it is falling in value and buying the currency when it is rising in value. Tilt strategy involves buying the currency when it is falling in value and selling the currency when it is rising in value.
Position Sizing
Trading strategies may vary depending on your personal risk tolerance, market conditions and investment goals. However, many successful forex traders adhere to a certain position sizing strategy. Position sizing is the size of a trade, in terms of assets or risk capital, that an individual feels comfortable with. When determining position sizing, traders typically consider their experience level and the size of the market they are trading in.
Trend Sniping
Trend Sniping is a trading strategy that involves taking advantage of short-term price trends in order to make profits. To do this, traders will look for opportunities to buy or sell stocks or currencies at a lower price than the current market trendline. If the trade is successful, the trader will then take profits and wait for the market trend to change in their favor before executing another trade.
