Forex is the global currency market, where traders trade in over-the -counter currencies. Also known as Foreign exchange, trading here is all about speculating the rise and fall of currency prices. No one owns physical currencies to trade with here. Based on speculation, it is about putting in money on your guesses. A good guess earns you profits. The operative here are the exchange rates.
FX speculations are never made off hand. Seasoned traders are well versed with factors that lead to currency valuation and fluctuation. They keep themselves updated on market news, they monitor the market closely and follow laws and policies, which affects or may affect currency rates in the market.
Years of experience and many losses and profits later, Forex trader experts have arrived at ease to implement strategies that help traders make profits. Here are few of the strategies, easy to implement and execute in your FX trading to ensure profits.
Here are a few easy techniques that help you with your Foreign exchange strategies.
The Blade runner trading strategy:
The intent of this strategy is to find, price entities, using Pure Price activity. It can be used for any currency pairing, at any given timeframe. Many traders prefer using this strategy, since it gives them signals, which are cluesto what should a trader be buying and selling.
The Blade runner strategy uses the 20 EMA indicator. The 20 EMA or 20 exponential moving average, is the moving average of a stock. This strategy works on the basis of moving average lines. When the 20 EMA line coincides with the 50 EMA in the chart, the stocks indicated in the 20 EMA tend to pick up. However, many a times the lines on the chart picks up fake signals too. Hence traders use various other indicators like candlesticks, resistance levels, pivot points or any other tracing system, in accordance to their comfort to read and verify the signals. This is one of the easiest Forex trading strategies to implement which helps in predicting trading trends, to make profits. This Foreign exchange pure price action strategy is trending currently in FX trading.
In scalping, a trader is looking at shorter time periods in the market. The plan is to make quick profits, multiple times a day. The strategy works on keeping trends under the scanner along with pips, to predict the precise time to buy or sell.
This strategy uses an anchor chart for an hour tomonitor the market using the 10EMA and the 20 EMA. This would be a buy chart. There are two indicators or signals that we get in this strategy: buying and selling. When the 10EMA is below the 20 EMA, it’s a signal to sell. In contrast, when the 10 EMA is above the 20 EMA, it is a signal to buy. The price in both the cases needs to stay on the right side of the moving averages, in the direction of the trends.
For scalping, however, we need to resort to a 5 minute quick strategy wherein, we use the 20 EMA.This chart is a trading chart.Here weuse candle sticks to give us clearer clues. When theprice touches the 10 EMA, it’s a trigger to enter the market. Count back 5 candles previous to the trigger, for your entry confirmation. Put a Buy stop, immediately, three pips above the highest price and the stop loss, three pips below. You start trading now and once you hit the profit target, you exit. Continue with the process till you made enough for the day.
Fundamental buying vs Technical buying
The strategies adopted by both the kind of traders, differ in their approach. An effective strategy is a combination of both.
In Foreign exchange trading, a lot rides on the world economic events and standing. In fact, the currency market is most influenced by the economic standing of a country. A fundamental trader, puts together all the information of a country vs another, scrutinizes the same and then decides on which currencies, he or she would like to buy or sell.
A fundamental trader will look at the economic standing of a country together with its laws and policies, local interest rates, government initiatives etc, since all of these factors together affect the movement of a currency. With the big picture in mind, a trader then makes his decision. A Fundamental strategy is made along the time line.
A technical strategy, on the other hand, will look at the historical financial standing of an economy, while deciding on the currencies to buy or sell. The future predictions here will be based on the trends as were in the past.
The crossover strategy of moving average
In Foreign exchange trading, moving averages are parameters which help make strategies easy. In the crossover strategy, traders use three average lines set to indicate:fast pace at 20 EMA, slow pace at 50 EMA and the 200 EMA, as the indicator for trend setting.
This is a day trading strategy, where the indicators work on the simple fundamental of the averages crossing each other. If the fast moving average line crosses over the slow moving line, decipher the signal to buy. When the fast moving average line crosses under the slow moving average line, it’s time to sell. The 200 EMA, being the trend setting mark off, indicates if a price is trending. The indication of a trending price is to be understood if the price bar is either above or below the 200 EMA, consistently.
A few FX Easy Trading strategies:
The Blade runner trade
Fundamental or Technical trading
The crossover strategy of moving average
FX trading is a game of speculation. A right guess can get you the riches but a guess gone wrong can cost you a small fortune, though there are ways to cushion these losses. What remains true of Forex trading though, is that without a strategy in mind and a worked out plan, and a back up ready, it is not advisable to plunge your money head long into trading.