Forex is a currency trading market which accounts for $5.1 trillion worth of currency trades each day. Considering the volume of trade, it remains open for 24 hours a day, 5 and half days a week. Trading successfully in this currency market depends on two intricate factors – speed and accuracy. To keep these factors constant, investors need to embrace the best Forex strategies to ensure maximum returns on investment.
What are Forex strategies? How do they function?
When a trader looks to start his or her trading career in the currency market, he or she needs to create a margin account with a broker. This account helps him/her to invest in the currency market with the aid of some advanced bonus from the currency broker.
However, one cannot make haywire investments. One needs to follow certain strategies which depict the procedures of trading in this arena. The major currency trading strategies include:
- Day Trading:
It is a short form of trade which opens and closes on the same day of a transaction. People trading with this strategy look to exploit the short-term and minuscule price differences that exist between currency pairs.
The biggest advantage of day trading is that investors can walk away with small yet multiple profits at the end of a day without incurring serious losses. However, this technique keeps a person devoid of significant returns unless conjoined with leverages.
- Trading with Positions:
It is one of the best Forex trading strategies when looking to incur hefty gains from the market. This strategy focuses on securing long-term benefits from the market by trading on exponential price shifts. Instead of following 1 minute or 5 minute charts, investors focus on day-end patterns and predict the market trend based on these readings.
- Swing trades:
If you are trying to exploit the bar charts and leverage your investment volume, then swing trading is meant for you. In addition to following a half hourly chart, it emphasizes on reversing market trends and going big on depleting ceiling currency values.
- Bollinger Bands:
Now, it is another investment plan which involves a close study of candlesticks and charts. To trade with Bollinger Bands, one needs to note the daily floor and ceiling values of a particular currency pair. A close analysis over a period helps investors to identify the market trend and hence, make their desired investment. Some veterans even consider it as the best strategy for Forex.
Leverages and Forex market:
Leverage in simple terms means giving your current account a much needed economic boost. Suppose, an investor has $100 on board and wishes to invest $1,000. In such a situation, he will opt for a 10:1 leverage ratio from his broker.
Leverages can be incorporated into all the above strategies and is a precise way to enhance your profit margins.
Therefore, if you want to start investing in the currency market, gain an intricate knowledge of the best Forex strategies and witness your trading account soar in no time.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.