Forex Trading Strategies - Sound Strategies Remain Useful for Decades

By Steve Maenshel

Forex trading strategies are one of the most crucial tools for determining when exactly to buy /sell currency. This most important and decisive moment is also the most difficult to define. Different Forex trading strategies, based on technical analysis, will help a trader to accurately determine the time of purchase / sale, thus providing maximum profits.

The decision often must be taken within a few minutes or hours, using various tools of technical analysis.

Main Forex trading strategies are:

1. Support and Resistance

Forex trading strategies, based on the break of a resistance, often give a great signal to buy. Buy and protect your position by the stop-loss order, which should be placed below the level of the occurred break (break level now turns to a new level of support). A new position can also be opened, if in the downward trend the price went up to the line of resistance, or if at the time of a rising trend the price fell to support.

2. Scanning for the intersection of trend-lines

If you are very confident in a particular trend line (i.e., if you checked it many times), the intersection of this line by prices would be a perfect time to enter into a trade or to get out of it sooner. And, of course, do not forget about the other technical indicators. In the case where the trend-line is used as Support and Resistance: buy, when prices reach an upward trend line; sell, when prices reach a downward trend-line. This can become one of your Forex trading strategies, based on the intersection of the trend-lines.

3. Trading in the break

Forex trading strategies, based on breaks, include 3 main options:

- Open the position prior to an anticipated break;

- If you see an unfolding break, open your position at the time of its occurrence;

- Open a position at the very moment of a break;

You can additionally use a combination of the above Forex trading strategies, and try to open a position in each of these phases, i.e. before a break, after the break and during a correction, which is likely to follow a break.

4. Choosing a suitable time frame

1). Holding a long position- for days or months - (is a moderately safe one of the Forex trading strategies, based on time-frames). It is best suited for strong trends. For best results, also look at the immediate options. Since this is a long position, you should also use fundamental analysis.

2). Holding a position of a medium length - a few days (the safest of the Forex trading strategies, based on time-frames). It is also desirable to ensure yourself by looking at shorter trends. Analysis of the medium length position is more complex, but such positions are much more stable for profit. Of course you need to choose the right moment to open / close a position. Again, these positions require the use of both - technical and fundamental analysis.

3). Short-term positions, lasting from several minutes to several hours. Pluses: there is no risk of fundamental news and the changes in prices at the time of your absence. Disadvantages: high risk of adverse movements in prices requires constant monitoring and concentration throughout the day. Basically, if a trader uses the data on a number of sellers and buyers in the market, that data will give the trader the needed information about where the market seems to go. Super-short-term trading could also be used with breaks and rollbacks. Super-short-term trading is highly risky, and thus it better suits professional traders and market-makers. This is the least safe Forex trading strategies.

Sound Forex trading strategies will aid you in finding the best times for your transactions. Sound Forex trading strategies remain useful for decades. - 23159

About the Author:

About the author: Steve Maenshel has been a professional trader for ten years. He can help you understand forex trading strategies. For more forex trading information, visit his forex resource center.