The essence of knowing ” What is Forex Trading?” lie in every trader’s ability to utilize a suitable strategy to obtain a better profit. Thus, it is very necessary for us to know not just one, two or three of these strategies but most if not all of them. You may think that the previously stated thought may pressure you to dig into your trading reading materials and memorize every concept that you see. But hey! take a deep breath and relax. What we are trying to do here is not to immediately convert you into an expert forex trading strategist. We acknowledge the fact that learning is best when it is given in frequent small bites. With this teaching technique we guarantee that you are able to have a time to apply your newly learned strategy before finally moving into another set of new strategies to learn. So to start with, we shall begin with the most basic strategies that are applicable for newbies.
The key concept for momentum trading is to remember that strong price movements in a particular direction are positive signals that indicate that a price trend will stay in that direction for some time. With this strategy, you will need the aid of visual analysis tools such as oscillators and candlestick charts to predict market behaviour.
- Range Trading
For range trading, a forex enthusiast needs to believe in the notion that market rates usually stay within a steady and predictable range for a given period of time.Thus, range traders are usually dealing with markets that are stable and with predictable economies. The type of currencies that are usually traded with this strategy are the ones that aren’t usually affected by surprising news events. The tools used for such trade include relative strength index, the commodity channel index and stochastics.
- Trend Trading
It is believed that this strategy is the easiest to learn and apply. The trick for trend trading is to be able to identify either a decreasing or increasing chart pattern then decide for an entry or exit point. When searching for these points, one must base it according to the positioning of the currency’s price within the trend including the trend’s relative strength.
4.Fundamental Analysis Trading
For this trading strategy, the traders aim to understand currency is undervalued or overvalued. In order to do so, they utilize published information to predict the value of a particular currency in the future. Though fundamental analysis trading is recommended for traders, this can be a bit complicated given the fact that it requires an understanding of several elements. Here are some topics that you can check when trading with such a strategy: retail sales, GDP, industrial production, CPI, inflation, purchasing managers index data, housing data etc.
In conclusion,the beauty of knowing “What is Forex Trading?” lie in your ability to seek for the suitable trading strategy that suits your personality and goal as a trader. Thus, it is very important to continuously learn and upgrade your researching skills to make sure that you are equipped with the necessary information that may be helpful on your journey.