Many forex traders try all available methods but do not receive trading results up to the mark. Thus, there is a need for devising effective forex trading strategies which can bring productive results in forex trading. Formulations of effective forex trading strategies involves the use of the most useful forex indicators which can be obtained from all free forex charts.
The different kinds of forex trading strategies can help you in making the right decisions in forex trading. You can make use of these tested strategies for selecting the right paths that should be followed. Once you get the hang of it, you will be able to developing trading strategies in no time.
Making the right trading decisions and formulating effective forex trading strategies is the basic foundation of forex trading.
Strategy 1: SMA (Simple Moving Average)
Successful trading involves optimization of risk in relation to the reward or benefit. All trading strategies must have a regimented method of minimizing the risk which at the same time deriving the maximum from favorable market moves. The Simple Moving Average Strategy is based on a SMA of 12 periods in which every period is of 15 minutes. This forex trading strategy is present in CFX trading charts.
This trading strategy makes use of simple algorithm. If the price of a currency rises beyond 12-period SMA, a signal is obtained to buy the currency in the market. On the other hand, if the price of a currency goes below 12-period SMA, then it is taken as a signal to Stop & Rewind. We can also say that the long position is liquidated whereas the short position is established.
A large number of forex trading strategies that are being used by different professional traders use moving average combined with other filters and indicators. The SMA method involves a risk element. The long position is stopped very quickly in a declining market as the price drop below SMA, thus leading to the creation of a Stop & Reverse signal.
Strategy 2: Support & Resistance Levels
Another forex trading strategy is the support & resistance strategy. This strategy involves deriving the support and resistance levels. In this strategy, the market trades above the support levels and below the resistance level. If the resistance or support level is disrupted, then the market supposedly follows in the same direction. The support and resistance levels are established by the analysis of charts and finding out where the forex market has broken down.
The forex trading strategies which will help you to obtain a high profit percentage will be extremely psychologically rewarding. It will keep your morale high and you will enjoy forex trading. You confidence in trading will build when you obtain series of profits with the help of forex trading strategies. Besides the manually derived forex trading strategies, nowadays there are a number of forex software available which also help the traders in devising successful trading strategies. Thus, you can make use of any of these effective strategies and make the right buy and sell decision to be a success at the forex trading market.