Trading in Forex on a part-time basis can be a great way to supplement your income. This is because, the market has a twenty-four hour operation means there are no starting bells, and you can trade after your regular work is over. Unlike stocks which can only be traded between 9.30 AM to 4PM, you can trade anytime of the day with Forex. At the same time, when trading currencies, there is profit potential in both increasing and declining markets unlike stocks where you typically have to wait for an uptick. To succeed in the currency market, you need to have trading strategies. If you find the currency market appealing, here are some Forex trading strategies that work.
For Trading Strategies for Newbies
Pair a strong currency with a not so strong currency. When trading currencies, you are effectively going short on one currency, and going long on another. Since this is how the Forex market is structured, then you can gain most profit from combining a strong currency and a weak currency. To determine if a particular currency is strong or weak, you have to read economic reports and look at charts.
Make trends and trend lines your friend. A trend refers to a consistent price movement towards a certain direction, and it can be either an uptrend or a downtrend. The simplest way to identify trends is by using trend lines. With trend lines, predicting future prices is possible, and it also makes identifying entry and exit points easier. As a general strategy, it is best to trade with trends, which means that if the general trend of the market is headed up, you should be cautious when taking positions that go the opposite direction.
Related to the concept of trends is using support and resistance indicators to enter and exit trades. All financial markets, Forex included, shows some consolidation around certain price levels prior to breaking through. When prices break below the support level, you should take a short position, and if the prices break above the resistance level, you should take a long position.
Trade using fundamental and technical analysis. While many would assert that one is more superior that the other, in most cases, those who are familiar with both concepts make more profitable trades and are better able to avoid risks. This is because fundamental tools include both economic and political news and they are good for determining the future value of the currency pair and dictating the broad themes in the market, while technicals are very useful in identifying entry and exit prices.
For Trading Strategies for Newbies
Pair a strong currency with a not so strong currency. When trading currencies, you are effectively going short on one currency, and going long on another. Since this is how the Forex market is structured, then you can gain most profit from combining a strong currency and a weak currency. To determine if a particular currency is strong or weak, you have to read economic reports and look at charts.
Make trends and trend lines your friend. A trend refers to a consistent price movement towards a certain direction, and it can be either an uptrend or a downtrend. The simplest way to identify trends is by using trend lines. With trend lines, predicting future prices is possible, and it also makes identifying entry and exit points easier. As a general strategy, it is best to trade with trends, which means that if the general trend of the market is headed up, you should be cautious when taking positions that go the opposite direction.
Related to the concept of trends is using support and resistance indicators to enter and exit trades. All financial markets, Forex included, shows some consolidation around certain price levels prior to breaking through. When prices break below the support level, you should take a short position, and if the prices break above the resistance level, you should take a long position.
Trade using fundamental and technical analysis. While many would assert that one is more superior that the other, in most cases, those who are familiar with both concepts make more profitable trades and are better able to avoid risks. This is because fundamental tools include both economic and political news and they are good for determining the future value of the currency pair and dictating the broad themes in the market, while technicals are very useful in identifying entry and exit prices.
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