There are numerous forex trading systems and strategies that have been tested and proven to ensure that you get the most out of your investment. Most of us are up to maximize the money invested in forex trading, but are you ready to venture into a more risky trading strategy? Are you willing to create your own strategy that will in the long run result to a viable strategy? This article has discussed 2 of the best Forex trading strategies to trade forex
Forex Trading Strategies To Trade Forex:
1. Large Stop loss
Despite the principles being a contradiction to common methods advised by Forex experts, it surprisingly yields impressive results. The important principle is trading using a very large stop, 500 pips, aiming at a profit of 50 pips per each position. It offers a base for new traders to skillfully trade.
Advantages of trading using this strategy are that chances of getting stopped out early are less. As a trader, you have less pressure to keep checking whether your stops hit a loss or not. It allows the market some space to run its own course. Moreover, when the large stop hits a loss, the direction of the market has a higher probability of changing, which is considered better than losing your stops and see the market moving to the initial direction it would move to.
It basically involves trading currencies based on analysis of the actual time. It aims at holding a position for a short period of time and at the same time maximizing profits. A scalper looks at various trades he or she can engage in and gain profits regularly.
Forex scalping strategy could be manual or automated. Manual strategy is where a trader looks at signals, deduces whether to trade, while automated strategy is having computer software that interprets for you. There are a variety of forex trading strategies which work to the nth degree that can be employed to make the most of your money.
Scalpers aim at a profit of 5 and 10 pips per each trade repetitively, but they have to keep monitoring each session.
As easy as it may seem, it has its risks. It requires you to be alert and quickly capitalize on arising opportunities that are up for grabs before they are ceased.
Advantages of scalping are that there are many opportunities to invest in. A scalper does not suffer from long term investments that make one loss major and fatal. This creates a basis for motivation and optimism. It requires less patience, and the ratio of reward to risk is 1:1.
The difference between scalping and large stop loss is the period the investment takes. Scalping takes a shorter time, and the profit gained ranges from 5 to 15 pips per each time, while large stop loss takes relatively longer, with the profit ranging from 50 pips per each position. Scalping reward to loss ratio is 1:1 while large stop loss reward to loss ratio is 10:1.
There are a number of forex trading strategies apart from the two discussed above. Forex trading requires education, planning, strategy and research without which trading is likely to take a wrong turn.