Newbies show their interest in Forex trading, but they do not know where they should start. If you go through the same problems, then you have come to the right place. We have provided a handy guide here so that devising a profitable trading strategy can be easier. But one thing should be transparent that no business strategy guarantees success, and none can find a single method that can work every time for every investor. There is always a potential risk, and if a mentor claims his strategy always works then, he cannot be trusted.
Trading without a comprehensive strategy is similar to gambling, and one must have strategies for two main reasons. The first one is to reduce the loss with the risk management system, and the second one to boost the possible earnings from the Forex. Strategies vary based on the situation, but the general rules are the same for all trades.
Growing a sense of trading is important to achieve success, and without knowing what someone is trying to achieve, the possibility of failure will increase. If the investor is not sure about his achievement, then he will be unable to generate the desired profit.
Profitable Forex trading strategies
1. Knowing the basics
Without a complete knowledge about the basics and common concept about pricing action, it is very certain that every strategy will fail. The best way to know about the Forex trading is to know taking a course. Sometimes the simplest strategy works well, and complex strategies can reduce the outcome. Simple strategies need less thought and easier to implement but provide the best result. Visit https://www.home.saxo/en-sg/products/mutual-funds and study about the mutual funds to enhance your knowledge. Once you know the advanced staff, basic things will become easier.
Moreover, simple methods are very easier to learn and apply. Complicated strategies are very harder to apply and very stressful. If a newbie does not understand the subject because of its complexity, then it becomes tough for him to gain success.
2. Moving averages
Moving averages are used with technical indicators in FX trading with regular periods of 10, 50, 100, and 200 days. These provide the data regarding price but do not predict the next move. The best moving average depends on whether the investor has a long time-frame of a short time-frame. For instance, 100 or 200 period moving averages work best on a longer time-frame. The moving average is a very popular indicator and works as the basis of building important strategies. In trend following system moving average works very well.
3. Fibonacci retracements
Fibonacci retracement is a great tool that is offered by most the futures traders in Singapore. This tool has many horizontal lines, which indicates the support and resistance levels based on Fibonacci numbers. Each level is affected with the percentage of the prior movement of the price. Fibonacci retracement is very accurate, and it provides reliable setups of the trades.
4. Channel pattern
Without having a good understanding of the trends, channel pattern may seem so tough for newbies, but the good point is most of the brokers offers an option to view channel patterns on the top of the software. This tool is used to measure uptrends and downtrends or ranging markets. The highs and lows of a trend can be identified easily using the channel pattern. We can take advantage of the dips if we use this tool in our chart.
5. Double tops and double bottoms
The double top begins with an upward trend, which takes sideways movement later, and the range moves to downwards with the reverse auction price. The double bottom starts with a downtrend, which takes the sideways movement and breaks through the uptrend later.
So, to plan a profitable FX trading strategy, we must know the basics and advanced terms of Forex trading and apply the technological knowledge tactfully. Different strategies work for different types of traders, and individual’s ability to learn new things also very crucial.