Forex Trading Strategies for the Best Trading Results

By Steve Maenshel

Forex trading strategies are essential for a trader. A trader should know when to be Bullish or to be Bearish. Forex trading strategies help you analyze the market and to take the last step of your analysis - to buy or sell a contract. This is the most complicated part of the whole process. Determining the time of the opening and closing of positions should be as accurate as possible.

Forex trading strategies in combination with technical analysis is usually used, especially to determine the time of entry / exit. Most often, a decision is made within seconds or hours.

The most common Forex trading strategies are:

1. Support and Resistance

Sound Forex trading strategies, similar to this one, remain profitable, even though they started to be used long ago. When Resistance is broken, it can serve as a good sign to buy. This new position can be secure with the aid of a stop-loss placed directly below the level of a break. The level of a break now will become a level of support. New positions can also be opened, when in a descending trend the prices rise up to the Resistance line. New positions can also be opened, when in an uptrend the prices fall down to the Support line.

2. Prices crossing the trend lines

Looking for the price to cross the trend line is yet another one of common Forex trading strategies. Prices crossing the lines of the trend allow a trader to enter the market or to exit the market early enough, especially when the crossing has occurred on a "proven" trend-line. However, do not forget the other indicators of technical analysis. When using the trend line as the level of Support and Resistance, long positions (Buy) should be opened on the fall of prices to the level of an upward trend, and short positions (Sell) should be opened with the rise in prices to the level of a descending trend-line.

3. Trading in the break

Forex trading strategies, based on breaks, include 3 main options:

- If you think you have predicted the upcoming break, open position prior to its occurrence;

- If you see that the break occurred, trade for the rollback, virtually inevitable after a break.

- Open a position at the very moment of a break;

There is also a 4th option for Forex trading strategies based on break - open position in each of the phases described above. One position - before a possible break, second position - immediately after this break and the third position should be traded in the hope of the expected price correction, which is likely to happen.

4. Trading time frames

1). Holding a long position- for days or months - (is a moderately safe one of the Forex trading strategies, based on time-frames). It is best suited for strong trends. For best results, also look at the immediate options. Since this is a long position, you should also use fundamental analysis.

2). Holding a position of a medium length - a few days (the safest of the Forex trading strategies, based on time-frames). It is also desirable to ensure yourself by looking at shorter trends. Analysis of the medium length position is more complex, but such positions are much more stable for profit. Of course you need to choose the right moment to open / close a position. Again, these positions require the use of both - technical and fundamental analysis.

3). Holding a short position - minutes or hours (the least safe of all the Forex trading strategies, based on time-frames). The advantage of short positions is that they have virtually no risk on the impact of fundamental news, as well as the price will not change while you were absent because you'll be watching the prices the whole time. The disadvantage is that the risk of loss is great, as well as you have to constantly monitor prices during trading until closing. To make the right decisions, it is best to be armed with data on the volume of sellers and buyers. This will allow you to much more precisely determine the subsequent direction of the market. Such ultra-short-term trading can also be used at the time of breaks as well as in the rollback of prices after the break. Basically, such positions are better suited for traders with extensive experience, while for beginners such positions hold too much risk. The second strategy (trading in medium-term trends, with duration of up to several days) is most suitable for the novice trader.

Forex trading strategies based on technical analysis indicators will help you achieve the best results. Forex trading strategies are especially useful for choosing the right time to enter and exit the trades. - 23222

About the Author:

Author Steve Maenshel has been a professional trader for ten years. He can help you better understand forex trading strategies. For more forex trading information, visit his forex resource center.