Forex is considered one of those areas that most people believe to be complex. In reality, it is like many other forms of investment where having little knowledge can be risky. The good news for people seeking forex investment strategies is that there are enough strategies available to achieve any investment goal. You can be a simple long-term investor, or you can sit and watch the market every day looking for profit at every turn. As long as you are willing to learn forex trading, you can find a suitable method.
Follow the Daily or Weekly Trend
One of the simple strategies for forex trading is to follow daily or weekly trends. Review daily and weekly charts and look for a trend that seems well-supported and join it. The only note about this specific type of trading is that your moves, which may appear small on the chart, can span hundreds of pips. This means you should trade in small quantities. Use a conservative portfolio allocation when buying and allow your position to evolve a bit. Set a reasonable stop and place a target. Beginners find this strategy easy because they do not have to constantly monitor the market. Instead, they can trade when they have the time.
Carry Trading
Carry trading is when you buy and hold a currency that pays a high yield against a currency that pays a low yield. Daily fees are paid on the interest differential between the two currencies. The advantage of this is that even when your trade isn’t moving, money is deposited into your account daily. Additionally, since most forex trades are leveraged, you earn on the size of your trade, not just on your capital size.
The downside of carry trading is that the interest rate differentials are usually not significant compared to the risks you are taking. Also, currency pairs that are considered good for carry trading typically react strongly to any news that poses risks to the global markets. In other words, as long as things are good, these pairs will rise and pay. If something unexpected happens, they can drop sharply and very quickly. If you have excessive leverage, you could lose your account in a flash.
Day Trading
The forex market is always moving – twenty-four hours a day, six days a week. Although there are specific peak trading times for forex, the forex market is always moving at least a little. Depending on what you prefer to trade, you can choose and select your time. Most day trading strategies revolve around technical analysis of forex, which has its positives. The market can be very technical, and if you have a sharp eye and a plan, you can capture it and make some profit from it.
Fundamental Trading
Some investors take a more traditional approach to investing. They prefer to invest in something they understand instead of looking for a signal on their chart. For this cautious investor, fundamental forex trading works best.
Fundamental trading is when you follow the news for several countries and play on the countries with enhancing economic trends versus those with weakening economic trends. This type of approach is somewhat easy because it looks at how things shape up over the long term. The complex part is learning to understand economic reports and compare them with other countries.
Although forex trading can seem complicated, it is something that anyone with patience and the ability to learn from their mistakes can gain some skill in over time. It takes some perseverance. The system is designed in a way that frustrates most people. You need to step back, look at the big picture, and trade small amounts, at least at the beginning. It is also best to avoid those “100 percent accurate forex trading systems” online until you gain some experience under your belt.
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Source: https://www.thebalancemoney.com/forex-investing-strategies-1344872
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