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In professional trading, there is a large number of Forex strategies, by which successful traders may achieve profitability.
Such trading strategies are often based on purely fundamental analysis (different economic news and outlooks), technical analysis (based on indicators and charts – Price Action), or a combination of these two.
In the end, the most effective trading strategies help the traders not only to determine the entry and exit trading criteria when potential profits should be withdrawn, but they also help them to set the right volume of trading positions and the overall money management (capital protection).
And now, you may read about certain time-tested and effective strategies in this article.
Price Action strategy
This is usually an effective trading strategy. The entire strategy is based only on the price action (round numbers, turning points, Price Action patterns, etc.) instrument while no indicators are used for this kind of strategy or any other additional tools of technical analysis. This strategy gained high popularity thanks to the fact that it may be applied under different market conditions (instruments), making it really a very universal type of strategy.
Trend Trading strategy
Trend trading or trading of trend situations belongs to another type of potentially successful strategies. As the name tells us, the know-how of this strategy is based on the identification and subsequent monitoring of trend development (the trend is rising, falling or moving sideways). For the monitoring of trend’s strength, development and direction, traders use different technical indicators here, where e.g. moving averages, indicators of relative trend strength or any other stochastic indicators may be included. Potentially, then market swings and trend lines.
The objective of a trend strategy is not the revelation of breakeven point, but the primary objective is to reveal the “optimal” points, where it’s appropriate to enter the trading position in the direction of a set trend. Professional use of this strategy offers traders the possibility to trade with a potentially very positive RRR (risk-reward ratio). And thanks to this fact, the trend strategy has become a very popular trading strategy among traders.
Range Trading strategy
Now, one of the most popular forex strategies is range trading. The basis of this strategy is to look for price levels (supports and resistances), where there’s a high probability that the trend is going to turn. Range strategy tends to be very successful mainly on markets where frequent oscillations between certain price levels occur and the market moves simply sideways. Usually, such conditions are offered to traders by forex market, therefore this strategy is so popular among forex traders.
Breakout Trading strategy
When comparing it to the previous strategy, a very similar on is the breakout strategy. However, in spite of the range strategy, this one is based on the determination of price levels (supports, resistances), where the trader expects a breakout through them. As in the case of the previous strategy, this one is also very popular in forex trading. The reason, while breakout strategy is attractive for forex traders is the higher volatility around searched price levels and also a number of breakout situation to a certain extent.
Carry Trading strategy
Without doubt, this is a very unique trading strategy where the primary objective is not to achieve profits by taking advantage of changes in the exchange rate, but the primary objective is to achieve profit by the use of so-called positive swaps, beneficial for the traders on the basis of different interest rates of respective currencies, and by holding overnight positions within days or even weeks.
If you would like to try out your trading strategy as well as trading in real with top-tier trading conditions and with a professional forex broker, don’t hesitate to try our demo account that could be open on our website completely for free and free of any risk: www.purple-trading.com
About the Author
Team Purple Trading
Purple Trading is a true and 100% fair ECN / STP forex broker providing direct access to the real market. High speed orders execution, no trade-offs, no limits for any type of trading, the most advanced trading technologies. Explore more about Purple Trading at www.purple-trading.com .
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