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04 Oct
2017

Raul Harman

Innovative enterprise consultant
 

Those with enough skill can make a fortune if they decide to start trading foreign currencies. In fact, the Forex market alone is currently worth more than $5.3 trillion, although this is not what makes it so lucrative. The profitability of this industry comes from its liquidity and volatility that allows those who react fast and have the right strategy to make a small fortune in no time. With this in mind, here are several Forex trading strategies that have proven to be quite reliable in the past.

Day trading

In the introduction, we mentioned that being able to react fast is one of the most important traits of a successful Forex trader. The reason behind this is simple – large moves may both earn you a fortune but they can also put you at a considerable loss. The choice, however, needs to be yours, which is why a lot of people go with day trading. This particular strategy protects you from overnight movements of the market and therefore, allow you full control over any investment that you make. In other words, the key to efficient Forex trading lies in your ability to adjust to any change on the market in due time.

Trend-following

Another widely popular strategy is the so-called trend-following. Once the value of a certain currency starts rapidly declining, a large number of people might start selling their reserves out of fear that these values will further decrease. The extent to which this goes can be quite drastic but for those who can recognize these sudden market shifts, there is no easier way to earn a fortune in the shortest timespan. Still, this cannot go on indefinitely and when the support levels are somewhat restored, the window of opportunity will once again be closed. Nonetheless, you need to be 100 percent sure this is a real trend and not just a fluke.

Counter-trend

The next strategy is directly opposite to the one we mentioned above. While it does have a somewhat higher success ratio, the profits are a bit smaller than with trend-following. What you are doing here is tailoring a strategy which assumes that the currently popular trend isn’t here to stay. The incredible success rate here mostly stems from the idea that you are putting your money on the idea that the market will switch states. In other words, you are relying on the very nature of the market in order to make money. However, it is also possible that the market will stay stable for a prolonged period of time, which is a trend that a lot of Forex traders sometimes disregard.

Trading the Forex fractal

Everyone knows the famous line – history always repeats itself. This statement also holds true in the world of foreign exchange (to some degree). If you decided to create a chart displaying market movements, you will notice that the same patterns repeating themselves quite frequently. Over time, you might even discover some patterns of your own, that will help you predict future movements of the current trend and even some of its daily fluctuations. This particular technique is also known as trading the Forex fractal and requires a lot of research, planning and, above all, experience.

Conclusion

As you might have noticed, most of the above-listed trends aren’t mutually exclusive. This means that you can customize and combine them into your own strategy according to your own liking. The first and the last two trends, in particular, are easy to integrate into virtually any strategy. However, they require a lot of research and effort on your part. This is where Forex market isn’t an exception – in order to generate value, you need to invest effort.

 

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