Forex Trading Strategies


There are many different ways traders try and make a profit from trading forex. Forex, also known as FX which is short for foreign exchange, is a multi trillion dollar industry that is traded all the time, 24/7, and all around the globe. People use countless ways to try and trade the ups and downs of the many currency pairs, thereby turning a profit.

There are as many different forex trading strategies as there are colors of the rainbow, so I won't try and list them all here, but I think there are a few very popular ones that come to mind. Instead of just taking each new method at random, I think it would be best to group them into three categories. That would be short-term (each trade can take anywhere from 0-2 days), medium-term (trades can take from 3 days-2 weeks), and long-term trading (any trades taking more than 2 weeks to finish) . Of course these categories are not set in stone and meant as a strict set of time limits, but they are just a guideline to try and group the different ways of trading.

The first method is a popular daytrading method called scalping. Scalping has some different definitions, but I define scalping as trying to only capture (or win) a small number of pips (units of price) from each trade. Scalping also is known as a quick method that can take seconds to several minutes or hours to do.

The second method can fit into the second of our time categories, it is called position trading. Position trader attempts to determine where and when the market will move, up or down, based on different technical indicators and / or current market news. If the trader guesses correctly, then profit is made.

The third of these popular forex trading strategies is swing trading. It can take many days to several weeks or even months to finish a trade of this long-term method. Swing traders try to spot the high of an up move (trend), or the low or a down move (trend) .. the turning point of the move, and then place a trade in the opposite direction, usually after some confirming patterns or indicators.

There are also some forex trading strategies that do not try and predict price moves, but profit from the market moves no matter what the direction. These methods are not as simple to define, but some examples of this are grid trading and hedging. I mention these only as some further information for people to learn and do more study on.

In this brief introduction of the varied forms of forex trading strategies used we have talked about a few of the most popular methods, but there are many, many more that exist. I hope everyone will take it upon themselves to do more research and learn more. Thank you for reading this brief article.

Dan Nell

Source by Dan Nell

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