People make huge profits in little to no time trading in the Forex market. Forex exchange is the biggest financial market in the world. However, earning profits in the Forex market isn’t that much easier. You need to devise an effective trading strategy to increase your odds of scoring a winning trade. The following strategies are considered effective in the Forex trading world.
Strategy 1
Forex scalping an effective trading strategy mainly focused on smaller market movements. This trading strategy involves opening multiple trades in order to earn small profits from each trade. Thus, scalpers work to produce larger profits by making smaller gains in larger quantities. This method is the opposite of holding a trading position for days, hours, and weeks.
Strategy 2
Day trading involves trading currencies for a day. However, it’s applicable in all markets; day trading is widely used in Forex. This approach suggests opening and closing all trades in a single day. All the positions should stay closed overnight to reduce the risk. Day traders, unlike scalpers who stay in the markets for a few minutes, stay in the market over the day managing and monitoring opened trades. In most cases, day traders use a time frame of anywhere between 30 minutes and 1 hour to generate trading ideas.
Strategy 3
Position trading is a long term strategy, which mainly lays stress on fundamental factors. Minor fluctuations in the market aren’t considered in this trading strategy, as they do not have any influence on the overall market picture. Traders practicing the position trading approach are more likely to monitor political developments, central bank monetary policies, and other factors to classify cyclical trends. Experienced traders may open a few trades throughout the year; however, the profit margin from these trades is expected to be at least a few hundred pips per trade.