When trading in markets, it is often beneficial to have a strategic approach. While the concept of trading on hunches and whims – and being profitable doing so, may sound attractive, in practice it is much more difficult. Successful forex traders stand out from others by the portfolio of forex trading strategies they use in different situations. Single system is not enough to produce the right number of successful trades every time. Therefore, knowing how to apply and adapt a trading strategy in accordance with all the market conditions is a key factor in becoming a profitable trader.
Forex traders use a variety of strategies and techniques to determine the best entry and exit points—and timing—to buy and sell currencies. Market analysts and traders are constantly innovating and improving upon strategies to devise new analytical methods for understanding currency market movements. What follow are some of the more basic categories and major types of strategies developed that traders often employ.
As with any type of trading, in order to be successful you need to have a strong strategy in place. There are many different forex trading strategies that traders use to varying degrees of success. It is important that you choose a forex trading strategy that fits in with your trading and lifestyle, so here we present some of the most popular options and forex trading tips that will help you profit when exchanging currencies.
Forex trading strategies can be either manual or automated. A manual system involves a trader sitting at the computer screen, looking for signals and interpreting whether to buy or sell. An automated trading system involves the trader "teaching" the software what signals to look for and how to interpret them. It is thought that automated trading takes out the human element of psychology that is detrimental to a lot of traders.
Traders have a wide variety of strategies at their disposal to try to interpret price movements and take advantageous trading positions. Some traders may use a particular approach almost exclusively, while others may employ a variety or hybrid versions of the strategies described above. While none is guaranteed to work all of the time, traders may find it useful to familiarize themselves with a number of strategies to build an arsenal of available tools for adapting to changing market conditions.
