In order to reap higher profits with your Forex investment, it is essential to use a productive trading strategy. The right strategy will help you not only to reap higher profits but also to trade successfully in the long run.
Effective strategies for successful Forex trading include:
Choosing the Right Broker
Before taking the plunge in the Forex market, it’s advisable to team up with a professional Forex broker with expertise in Forex trading. When you find a new Forex broker entering the Forex trade every day, the trick is in finding the most trustworthy one.
You should read reviews, go though terms and conditions, contact the broker’s customer support, visit forums etc. to gather your research material. Your choice depends on your trading preferences, available investment capital and knowledge of Forex trade.
It is important to master the basics to succeed in any trade. Read up on articles and forums, sign up for Forex courses or seminars, make new online and offline friends in the trading world and ask for help from professional traders.
Keep Yourself Updated
Always keep you eyes and ears open to the Forex trading market. Keep updated through daily trading news and your Forex trader contacts. Staying in touch with the market will help you to understand the trends and eventually to anticipate them.
Analyze the daily trading news to invest better. However, your judgment should not depend solely on news analysis, since often a Forex market that seems extremely bullish can actually be an undercover bear.
Stick to One Plan
You should make a clear entry/exit plan. Decide about number of pips you want to make, your loss limit and the reasons for entering a trade. Set your stop/loss targets and stick to your plan.
Price Action Strategy
A price action strategy is one of most profitable strategies to predict the movement of prices. Price action can provide you with high probability entries into the market, but if you don’t know how to properly manage your risk and you may end up over-trading and losing money.
You can learn this through reading “raw” or indicator-free price action of a Forex price chart. It will help you to pick and choose which setups you take and which you don’t.
Higher Time Frame Strategies
Many traders get greedy and trade on a lower time frame, which leads to over-trading and over-leveraging. The lower time frame charts contain more random price movement than the higher time frames. Higher time frames like the daily and weekly charts, the 4h chart, work as “filters” of the lower time frames, to show you a clearer picture of price over a period of time.
There is no single Forex trading strategy which universally ensures you success in each trade. Your strategy should be flexible enough to allow you to eventually trade profitably on any time frame, and use discretion in deciding which trade setups to enter and which one should be kept aside.