5 Strategies & advantages to Trade in Forex Market!!

5 Strategies & advantages to Trade in Forex Market!!

"In trading, you have to be defensive and aggressive at the same time. If you are not aggressive, you are not going to make money, and if you are not defensive, you are not going to keep the money." So before starting your trading journey, you need to fix your mind.

''Strategy is not the consequence of planning, but the opposite: its starting point''. If you think of trading Forex, be strategic from the beginning. Without being strategic, you can't achieve your goal.

Though Forex Trading has high market volatility and leverage, it offers the most liquidity, and with a couple of seconds, anyone can deposit and withdraw. Many people or institutions can participate here easily.

For a long time, Forex has been the largest market globally. Here currencies are traded in pairs. The essential aspects of Forex Trading are Base & Quote currency pairs, Pip & Pips, Leverage, Ask, Bid, Spread, etc.

In the early 1970s, modern Forex Trading started. Mostly it is known as Forex or FX. But the amplification is ''Foreign Exchange''. At present, Forex trades approximately $6.6 trillion every day. This financial market is available 24/7 worldwide.

What Is a Trading Strategy?

The process of buying and selling products in the securities markets following systematic ways is called a trading strategy. These strategies formulate the rules and criteria of trading decisions. Different trading has different approaches to trade.

Sometimes strategies may be simple or complex. But complexity doesn't mean it will always be profitable. Profit or loss depends on the situation and time. It considers investment style, market cap, technical indicators, fundamental analysis, industry sector, time, leverage, tolerance rate of risk, and many more related to trade.

Strategies should be changed and re-evaluated periodically as per market situation and on traders' goals, and it is necessary for any trading.

5 Forex Trading Strategies

Forex trading strategy is helpful for the traders to gain profit and secure trade. Treaders can follow strategies according to choice and technical analysis.

When setting a Forex strategy, one should remember some facts like how much time one can spend on trading, on which currency pair they want to focus, how much one can invest and lose, want short or long term trading, etc

Here we present some effective Forex Trading Strategy:

1. Scalping Strategy

Traders who like short-term trades can go through the scalping strategy. It doesn't need much time and captures maximum multiple price movement. It focuses on piling up the small amount with frequent profits.

Along with this, it tries to minimize losses. 
Scalping can go with only small pip movements. But it can also be a cause for huge losses if you involve yourself with high leverage.

2. Day Trading Strategy

Day trading is also short-term trading. But, Day traders aren't used to fast trading like scalping. They hold the trading position for a minute to hours but don't prefer to keep it overnight. 

This strategy source completes their trading on the same day to avoid risk. They also prefer repeated small earnings to make decent profits, similar to the scalping traders. Various technical tools are used to analyze the market and recognize the trend.

3. Swing Trading Strategy

This strategy follows a short/medium trading form. Here traders generally hold positions for several days or a few weeks. Profits are gained by identifying the ‘swing highs’ or ‘swing lows.’ 

This strategy is popular among full-time job holders as they cannot monitor the charts all day long to trade. They trade in leisure time and spend several hours examining the market to make a trade.

People interested in swing trading should learn more about Swing Trading Strategies to minimize risk.

4. Position Trading Strategy

It's a long-term trading style. People who are patient enough may choose this strategy. Here the main focus is earning the maximum profit from high moves.

At this time, traders hold the position for a few weeks or months to judge the market volatility. Traders don't bother with minor changes in price and don't monitor the market so often.

5. Carry Trading Strategy

This strategy involves currency borrowing. Lower currency pairs are borrowed here to establish a fund to purchase a currency pair. This trading strategy can be negative or positive according to currency pair choice.

Trading strategies depend on people's choices and abilities. If you want to be a good trader, avoid hype and fix your plans according to the market.

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Advantages of Trading Forex

Forex Trading has been the market hero for a long. This trading has so many advantages that's why people are eager to trade via Forex.

Here are some advantages of Forex Trading:

  • Forex Trading contains low costs in both brokerage and commissions. You don't have to worry about paying extra brokerage and overhead expenses here.
  • The most exciting fact about Forex Trading is anyone can trade from anywhere, at any time. It provides 24/7 service globally.
  • This trading suits a variety of trading styles. People can choose short-term or long-term trading according to their desire.
  • Forex Trading provides high liquidity in the comparison of any other financial market. About $6.6 trillion is traded here per day basis.
  • It's an Over-The-Counter (OTC) market that operates globally. So, there is no central exchange or regulator.
  • Here market volatility is user friendly.
  • Forex has a variety of currency pairs. There are 28 major currencies. Among them, eight currency pairs are the top-most.
  • Forex Trading allows you to start trade with a small amount. And from a pip moves, you can gain profit.

Disadvantages Of Trading Forex 

In the world, nothing is errorless, and even the beautiful moon has spots. In the same way, Forex Trading has so many advantages with a few disadvantages too.

Some disadvantages are mentioned below:

  • Forex Trading faces a lack of transparency for its broker domination nature.
  • This market follows a complicated price fixation process.
  • It has high risk and high leverage, which can be the reason for the massive loss.

Though Forex Trading has disadvantages, you can earn a considerable profit from here by being strategic and a good learner. The best thing here you need is to be a good observer of the running market.

But always remember that every trading has ups and downs. So use only those amounts that you afford to lose.

We hope that this article helps you with a better trading experience.