Forex Trading For Beginners (Free Forex Education) - page 3
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Trading Strategy Types Trading strategies vary considerably from trader to trader, depending on their personality and risk appetite. What follows in this section and its subsections consists of descriptions of a number of the most commonly used forex trading styles, along with a brief review of the techniques involved in implementing them. Types of Trading Strategies Each of the primary trading styles has been briefly introduced below. They have been placed in order according to the time frame that the trader operates in when employing that strategy, from the shortest to the longest time period that the trader typically holds a position. * Scalping – a very short term strategy used mostly by market makers and speculators to attempt to capture the bid/offer spread Scalping in the forex market consists of an extremely short-term trading strategy which attempts to take advantage of the bid offer spread. In doing so, scalpers act a bit like a market maker, while only holding positions briefly like a day trader. The basic objective of scalping consists in getting in and out of the market as quickly as possible for a profit. One scalper summed it up well by describing their idea of a long-term investment as holding a position until noon. Scalping the market can be quite lucrative, although the profits do not come without a pretty steep price in terms of personal time invested. Scalpers must be on alert and completely absorbed in the market throughout trading hours. In addition, scalping requires the trader’s books to be extremely well organized, leaving no loose ends and keeping perfect track of every lot traded. Like day traders, scalpers typically do not hold overnight positions Scalper Trading Techniques Scalpers rely primarily on liquid markets above all to give them opportunities to trade on both sides of the dealing spread. The possibility of entering and exiting a trade profitably with a minimum of effort and time elapsed is the ideal situation for a scalper. Once the profit on a trade has been realized or the position stopped out, the scalper moves on to the next trade. They might then elect to reposition at a lower price or short at a higher level. Successful scalping involves the trader realizing profits on trades as continuously as possible. Scalpers use technical analysis primarily to set levels to trade against. Nevertheless, the point of scalping consists of realizing profits quickly and holding positions for the least time possible. Scalpers tend to make the most money in deep, liquid markets that offer the tightest spreads such as the EUR/USD or the USD/JPY currency pairs. Volatile markets with less liquidity are usually harder to scalp. * Day Trading – a short-term trading strategy in which a trader liquidates all positions before the end of the trading day Trading in the forex market goes on pretty much continuous throughout the business week. It starts after the Monday morning opening in the Far East and Australia that occurs on Sunday afternoon in New York until the Friday New York close. Day Trading as a Strategy As a result, day trading in the forex market usually refers to trading strategies that involve closing out all positions before the end of the day. It will also usually involve trading during a normal trading session in whatever time zone the trader is located. Day trading allows a trader to avoid taking overnight market risk, which can be considerable, depending on what “overnight” means in your time zone. To U.S. residents, for example, overnight means during trading sessions in the Far East and the early European session before New York starts tradin Furthermore, day trading in the forex market was once the domain of professional traders. In many cases they worked for large banks and financial institutions which could take on large positions on lines of credit. Nevertheless, in today’s forex market, with the proliferation of online retail forex brokers, the possibility of day trading in the forex market is now available to millions of individual forex traders Some Advantages of Avoiding Overnight Risk Holding forex positions overnight can be a nerve racking endeavor. One of the most obvious reasons that people prefer to day trade is that it allows them to be alert during trading times. Day trading also lets traders get a good night’s rest without having to worry about a position going against them in an illiquid overnight market or getting stopped out unnecessarily because they could not watch their levels. Many open forex positions will include a stop loss order for risk control. The levels at which stop loss orders are placed will often be fine tuned according to support and resistance levels that can be observed by a wide audience watching the same data. The potential therefore exists for large players to take advantage of less liquid overnight markets to go “stop hunting”. This means they are looking to provoke certain technical levels to trade in order to trigger stops and enhance their profit * Range Trading – a short to mid-term strategy based on first identifying and then trading within a range. Involves selling at the top of the range and buying at the low end of the range One of the more popular trading techniques used by forex traders consists of range trading. A range in currency lingo refers to the exchange rate for a currency pair trading between two clearly identified price levels, one higher and one lower. These levels at which prices tend to reverse make up what are commonly known as levels of support and resistance. Support levels provide traders with an indication of where buying activity appears to prop up a currency pair’s exchange rate at a certain level. On the other hand, resistance is indicated where selling pressure increases and overwhelms demand, thereby bringing the rate down Range Trading Technique Range trading done optimally can be extremely lucrative for a trader with the right temperament and disciplined mindset. One of the requirements for a trader to range trade successfully involves knowing when to enter and exit trades. Once levels of support and resistance have been successfully determined by the trader — generally by using price charts and other technical indicators — they are then prepared to initiate position The trader will typically place a buy or sell order midway between their identified range’s support and resistance levels. Once executed, they will then either place a stop-loss sell order below the support level or a stop-loss buy order above resistance respectively to optimally limit their risk. In addition, the trader will aim to take profits by selling at the upper part of the range if they went long, or by buying near support at the lower part of the range if they went short. Managing Range Trading Risk Two important qualities of range traders are patience and the ability to pull the trigger in a disciplined way when levels are reached. Range traders generally enter their stop-loss orders to manage risk just outside of the identified trading range in the event of a breakout. They might even reverse their positions on a confirmed break. While not as spectacularly profitable as trend trading, part of the reason that this trading strategy is so popular is because of the fact that some currencies can trade in definable ranges for weeks and sometimes even months at a time. Also, while currency exchange rates do fluctuate periodically, they tend to trade within an overall range often defined by a central bank’s comfort zone for its country’s currenc * Swing Trading – basically, buying low and selling high, often using technical analysis to determine swing points where the market is oversold or overbought Swing trading resembles range trading in that both strategies rely on the correct identification of the levels of support and resistance. Nevertheless, a number of subtle differences do exist. Swing trading basically consists of a longer term strategy, whereas range trading can be short to medium-term in focus. The main difference between the two strategies is that the range trader will rely on identifying a range to trade in and out of profitably, as often as possible. On the other hand, a swing trader will generally take on a position and wait for a certain percentage move or swing to occur in order to take their profits. Swing Trading Tools Swing traders, much like range traders, tend to rely on their technical analysis of price charts. They often use one or more technical indicators such as moving averages and oscillators to indicate overbought and oversold conditions in the market. While the range trader trades ahead of key support levels where they would buy and resistance levels where they would sell, the swing trader will more likely trade a break of such levels and then hold the position for a longer period of time. In many cases they make a larger profit from the bigger move, but they usually trade less frequently. When swing trading, stop loss orders are also usually placed safely beyond the appropriate support and resistance levels, if this risk is affordable to the trader. Swing traders also generally have their stops trail the market as their positions gain profits. Swing versus Trend Trading Swing trading — while not as potentially lucrative as trend trading — is a strategy that can produce good results for well disciplined trader Nevertheless, the importance of trading with a comprehensive trading plan is as essential when swing trading as when using any other type of trading strategy. * Trend Trading – the most long-term of the trading strategies, trend trading involves identifying and trading the overall direction of the market, often until a reversal occurs. Trailing stops will often be used to protect profits. Despite recent events causing some countries to decrease their U.S. Dollar holdings and a general loss of confidence in the currency, the U.S. Dollar continues being the world’s leading reserve currency As a result, observing trends in the currency market often consist of tracking the performance of the U.S. Dollar against the rest of the world currencies. Due to this fact, major trends in individual currencies also usually get measured against the U.S. Dollar. Nevertheless, substantial and potentially profitable trends can also be observed in the cross rates for currencies other than the U.S. Dollar quoted versus other major currencies like the Euro, the Japanese Yen and the British Pound Sterling. How Trend Trading Works The basic idea behind trend trading consists of first identifying a long-term, medium-term or short-term directional movement occurring in a currency pair. This can be done by reviewing a graph or chart of the exchange rate for a currency pair plotted versus time. Identifying a short term trend could be done on an hourly chart covering a period of less than one week, while a medium term trend would require looking at price action over a few weeks to a few months. Long term trading would involve reviewing a period of several months to several years. A trend trader would then take action by looking for a pullback to initiate a forex position in the direction of the prevailing trend, with clear exit points for limiting risk and taking profits. Refer to Forex Trading | Forex | Forex Broker | Excel Forex for more info
In swing trading, traders will make use of bigger times frames daily or even four-hour frames, weekly as well as monthly timeframes. In normal conditions, when you do swing trading, you may at times have to leave your positions open for many days or even weeks. Most experienced traders would prefer swing trading to day trading.Most times this is because they have already tried their hands on other types of trading methods and they have concluded that they are more at ease and profitable with the bigger time frames and trading with these times frames makes more pips for them. Most swing traders feel that though small times frames may have given them some mincreased trading opportunities, these trading opportunities most times could mean more money, less profits or even more losses. But I wil advise new traders to first try day trading and gather more experience as swing trading is more technical.
There are tons of training videos out there but some companies only offer high end, customized training and one such company is Delemont Capital. They walk you through every step of the way, answer your questions and help gain a solid understanding of the Forex markets
In my opinion Forex trading Solutions is one of the best. The reality is that most retail brokerage firms will actually hedge your trades,.they know that 90% of traders fail and they usually take positions against you. So, if you come within a few pips of your stop, the average firm will manipulate your price to take you out.
Yes there are some money making broker from Russia , Cyprus, BBI do this kind of manipulation with clients and those are low reputed brokers. So one need to choose well reputed broker at first. Also brokers hedged or not against ur position is not a matter and that will not make u loser.
i always read market news, i think it's important, because it may have chance to be high impact, like news that affect to two country, one up and one down, that can be a high profit if we open position at the right position.
i always read market news, i think it's important, because it may have chance to be high impact, like news that affect to two country, one up and one down, that can be a high profit if we open position at the right position.
i agree about read the market news is very imprtant, cause me too always read the market news from HiWayFx. cause i think it can help me to predict the price movement.
i agree about read the market news is very imprtant, cause me too always read the market news from HiWayFx. cause i think it can help me to predict the price movement.
just keep it bro, to avoid lose and make profit u must do what u can with always hunting news u may find some information that can help u when u do forex trading, and hope it can be high impact for price movement.
just keep it bro, to avoid lose and make profit u must do what u can with always hunting news u may find some information that can help u when u do forex trading, and hope it can be high impact for price movement.
just to make a big profit at my account in HiWayFx, i hunt a news about forex trading, because i think it can be the indicator for price movement. although it doesn't work, at least im already try.
just to make a big profit at my account in HiWayFx, i hunt a news about forex trading, because i think it can be the indicator for price movement. although it doesn't work, at least im already try.
News trader would likely to place an order an hour before the news are taking places. It's kinda risky because the price movement caused by market news is moving highly.
Try to get yourself updated with Economic calendar and market news from HiWayFX