Getting into forex trading is like sending yourself in a battlefield of financial complexities. You must be equipped with the necessary tools before you start. Creating a strategy in forex trading will helps guide you in making objective approaches to help you beat the market. Trading should be done on the grounds of tested strategies rather than relying on a trader’s hunch. There are strategies that designed to help you gain long-term profits. To gear you up in the world of forex trading and consistently make money, here’s a rundown of winning strategies that you can use:
Strategy 1 – Your FUNDS and Your ATTITUDE
Set the capital that you want to allocate to your forex trading, set the profit target you want to achieve on a specific date, establish the proportion of your capital that you are willing to risk on every single trade and identify your ideal risk-reward ratio or the level of return you want to target in each trade. Your strategy will depend primarily on your funds and your willingness to risk those funds. Your attitude is also a key player in making your money grow. You can play safe or go all-in. Whether you are aiming for a high return targeting a smaller return depends on your money management strategy.
Strategy 2 – Limited Currency Pairs
It is recommended that you limit your analysis to a just a few pairs or currency pairs that you feel most comfortable trading. You can simply choose currency pairs you that you understand well. A currency pair is the quotation of two different currencies from different nations.
Some of most popular forex pairs are EUR/USD, USD/JPY and GBP/USD. Your choice of pairs to target echoes your method to forex trading in general and is another integral part of your strategy.
Here are the top 8 major currency pairs:
1. U.S. Dollar (USD)
2. European Euro (EUR)
3. Japanese Yen (JPY)
4. British Pound (GBP)
5. Swiss Franc (CHF)
6. Canadian Dollar (CAD)
7. Australian/New Zealand Dollar (AUD/NZD)
8. South African Rand (ZAR)
Strategy 3 – Trading Technical vs. Trading on News
The fundamentals of technical analysis can be quite perplexing and that is why others opt to rely on news feeds. The decision is entirely up to you. If you wish to be a skilled technical analysis trader, one tip is to use two indicators and use multiple time frames for confirmation. However if you would like to trade on news, make sure you get reliable data releases.
Strategy 4 – reading the INDICATORS
The application of indicators to your chart creates the basis to generate signals to buy or sell. Different indicators will lead to a variety of systems that you can apply to your forex trading strategy. Whatever system you apply, the indicators should help you to confidently read the trend. If you think a system generates proven signals and aids in making you read the market then you can make it a part of your trading strategy.