Winning Strategy In Forex Trading

winning forex trading

Forex is one of the fastest earning and profiting platforms according to many. Due to its popularity and easy way to make money. There are many winning strategies in forex to maximize your profit percentage.  Many individuals consider the forex market to be profitable, and more and more people are entering this market on a daily basis. Let’s examine why it is worthwhile to handle Forex as a business and what it can provide traders in terms of monetary stability and expansion.

The foreign exchange (forex) market is a popular place for currency trading since it has the lowest starting capital requirements for day traders. Due to the leverage offered by forex brokers, forex trades are conducted seven days a week, 24 hours a day. A novice trader who engages in forex trading runs the risk of suffering significant losses.

Three Effective Techniques

By this point, you’ve decided on a time frame, your ideal position size for a single trade, and the rough number of transactions you want to open in a given time frame. We provide three well-liked Forex trading methods that have been successful below.

Scalping

Forex scalping is a well-liked trading method that focuses on minor changes in the market. In order to generate modest profits for each trade, this method entails opening a huge number of them.

Because of this, scalpers attempt to increase revenues by making numerous smaller profits. This strategy is entirely opposed to maintaining a position for several hours, days, or even weeks.

Due to its liquidity and volatility, forex is a very popular market for scalping. Investors search for markets with active price activity so they can profit from small-scale swings.

This kind of trader prioritizes gains of approximately 5 pip per trade. However, they are hoping that many deals are Profitable since gains are steady, predictable, and simple to attain.

You cannot afford to stay in the trade for an extended period of time when scalping. Furthermore, scalping takes a lot of time and focus because you need to continuously examine charts to discover fresh trading opportunities.

Let’s now give an example of how scalping actually functions. The EUR/USD 15-min chart is shown below. Our scalping trading approach is predicated on the notion that we seek to sell whenever price movement tries to climb above the 200-period moving average.

We created four trading chances in around three hours. Each time, the price movement first rotated lower before reaching just a little bit over the 200-period moving average. The price action never exceeded the MA by more than 3.5 pips, and a stop loss is placed 5 pip above it.

As we concentrate on completing a high number of Profitable Trades with lesser rewards, our take profit is also 5 pip. Therefore, a scalping trading method was used to acquire a total of 20 pip.

Winning in forex trading
Winning in forex trading

Day Trading

The practice of exchanging currencies during a single trading day is referred to as day trading. Though useful in many markets, the day trading method is most frequently utilized in the forex market. This trading strategy suggests that you initiate and complete each trade in a single day.

To reduce risk, no position should be open overnight. Day traders typically remain active throughout the day monitoring and managing opened trades, in contrast to scalpers who just want to stay in markets for a short period of time. The 30-minute and 1-hour time periods are typically used by day traders to develop trading ideas.

The news is a common foundation for day traders’ Trading Tactics. Scheduled events, such as GDPs, interest rates, economic figures, elections, etc., frequently have a significant effect on the market.

Day traders typically set a daily risk limit in addition to the limits set on each position. Setting a 3 percent daily risk cap is a decision that traders frequently make. This will safeguard your money and account.

GBP/USD is moving on an hourly chart in the above graphic. Finding the horizontal support and resistance lines on a chart is the foundation of this trading approach. As the price is trending upward in this instance, we are concentrating on resistance.

Price movement immediately rotates lower after tagging the horizontal resistance. To allow for a slight breach of the resistance line, our stop loss is placed above the previous swing high. Consequently, a stop loss order is put in place 25 pip above the entry point.

We use the horizontal support as a Profit-Taking level on the downside. In the end, the price action rotates lower, giving us a profit of about 65 pip.

Placement Trading

A long-term strategy is position trading. This trading approach, in contrast to scalping and day trading, places a strong emphasis on fundamental variables.

Since they have little impact on the overall market picture, minor market changes are not taken into account in this method.

To spot cyclical trends, position traders are likely to keep an eye on monetary policies of central banks, political developments, and other fundamental factors. Only a few deals may be opened annually by successful position traders. The profit targets in these trades, however, are probably going to be at least a few hundred pip each trade.

The longer it takes for a position to play out, the more patient traders should use this trading method.

On the weekly chart below, you can see the dollar index (DXY) changing the direction of its trend.

The significant monetary stimulus that the US Federal Reserve and the Trump administration delivered to aid the faltering economy led to a reversal. As a result, there are more dollars in circulation, which lowers the dollars’ worth. Position traders are poised to start dumping the dollar in response to stimulus plans worth trillions of dollars.

The macroeconomic environment and long-term technical indicators may determine their objective.

They will try to exit the trade once they think that the present bearish trend is about to come to an end from a technical standpoint. In this illustration, the DXY rotates at multi-year highs before trading over 600 pip lower four months later.

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