15 Jun Forex Trading Strategies (2018) (Most Popular)
Forex trading is the act of converting your money to a different currency. This is done on the foreign exchange market. You mostly do this when you go for holiday oversees. Major corporations, governments and other major entities also convert their money into different currencies except on a much larger scale. These large-scale conversions cause the exchange rate between two currencies to fluctuate (or increases and decrease) over time. This is where individuals can take advantage of forex trading to make a profit. If you exchange your money into another currency, then wait for that currency’s rate to decrease against your countries currency and then exchange that money back to your currency you will make a profit.
For example, let’s say I live in Europe and I went to holiday in the US with the exchange rate at €1 = $1.50 and I converted one Euro into US dollars but don’t spend it. Then when I arrive back to Europe the exchange rate is at €1 = $1.40. So, when I transfer my $1.50 American dollars back to Euros I receive €1.10. Therefore, I made a profit of €0.10. Obviously, you don’t need to go on holiday to do this. You can Forex Trade online or anywhere you have an internet connection using brokers. You can also use more than just one Euro, to make much more money. The Foreign Exchange Market is open 24 hours a day from Monday to Friday.
Here are the top four most popular strategies that are being used for Forex Trading in 2018.
Scalping is short-term trading. This strategy involves you trading your money for just a short amount of time, even just minutes. You convert your money into another currency, you hold on to your position for just some minutes and then when the exchange rate becomes slightly in your favour you exchange the money back to your home currency. This will make a tiny profit, but if you do it trading with different currencies continuously it’s possible to make a fair chunk of money.
As the name indicates this involves trading just for one day. Your trade is done within a 12-hour period so you are not affected by large exchange rate fluctuations overnight. When using this strategy, your trade may just last a few hours. This strategy has the possibility of making a bigger profit in a single trade than Scalping.
This strategy often involves your trade lasting several days. The idea is to find a short-term price pattern and profit from it. For example, a pattern maybe that one currency may be slowly rising against another currency slowly over time. You can take advantage of this pattern by trading into it to make a profit. As soon as the pattern stops or breaks, you stop trading.
Positional trading has the idea of making long-term gains. Unlike the other strategies which are about short-term gain, positional trading involves holding on to another currency for a long period of time. The strategies aim is to maximize profit from major shifts in prices.
These four strategies are the most popular used strategies in Forex Trading according to a United Kingdom survey by Top Trading Platforms. They have been effective for both beginner and expert Forex traders.