In any venture there is always a level of trial and error. No business can succeed without the use of trial and error. It’s also very important that you learn to implement any of the most basic trading strategies in order to make your business profitable. If you are a beginner in the forex market then you should know about the four main trading strategies used by experienced traders.
The four strategies discussed here are known as trend trading, counter-trend trading, breakouts and trends trading. These four types of strategies are used by many traders every day. There are many traders who don’t know these strategies well and don’t implement them when trading. If you are one of them, then I would like to tell you how to be a better trader so that you can also make more money and trade more confidently in the forex market.
Trend trading is a basic strategy for all day traders. This type of trading is characterized by the use of a technical analysis tool which enables traders to determine the up swings and down swings of the price of currency. The up and down swings are the results of the changes in the fundamental factors of the currency. With this strategy, you have to watch the movements of the prices and make your decisions accordingly and when you find the up swings, you have to buy, if you find the down swings, then you have to sell.
Swing trading is another of the many trading strategies used by day traders. Traders use this strategy when they want to take advantage of the movement of the prices over a longer period of time. The scalping price action technique of scalping is very popular among day traders. With scalping, you buy and hold positions for a very short period of time; this may range from a few minutes to a few hours.
Another basic trading strategy is the Simple Price Volume Strategy (SVP). With the help of this strategy, you are able to determine the price movement easily. For this strategy, you need to identify the overbought and oversold conditions. The overbought condition is when there are overbought securities, and the oversold conditions are when there are underbought securities.
There are a number of indicators available for you to choose from. However, it is better for you to stay away from those indicators that are not accurate. Also, you need to select indicators that do not show any trend. To know which volume indicators are reliable, you can check out a number of price or movement patterns in the past. If you use this method among other techniques, you can have a better idea on the price patterns and you will be able to identify trends.
The five categories of trading strategies are support, pullback, breakouts, price fluctuations, and mean reversion. When you have selected the appropriate five categories, you need to find the trading signal so that you can exploit the market. There is a number of technical indicators available for you to choose from such as oscillators, moving averages, strength overlays, and MACD.
When you are using any of the above mentioned indicators, the first thing that you need to do is to find the breakouts. You should find the signals that show the high volume or the low volume in the market. Also, you should pay close attention to the indicator that has the best representation of the price action. The oscillator is considered as one of the most popular technical indicators, and it uses the CTA or the cycle time element. It helps you to determine the price action, and this is the reason why it is commonly used by novice traders.