Advanced Forex Trading Strategies

Advanced Forex Trading Strategies

Being familiar about the tools that you can use and the strategies that you can apply in forex trading can help you in minimizing the risks and maximizing the profits.

Price Charts

Price charts are very important in trading currency pairs and without this tool you won’t be able to create or implement a workable trading strategy. It is vital for you to learn how to use these charts in order for you to spot trends and be able to make solid forecasts. Here are the most common types of charts that you need to be familiarized with:

Line

This is the easiest price chart to understand but serves as the most important of them all to learn the fundamentals of forex trading. The line chart outlines the changes in the price of an asset in a specific timeframe.

Bar

This is the more complex version of the line chart which can be applied for basic trading strategies. The bar chart outlines the changes in the price of an asset with the use of an upright bar that denotes a specific timeframe. For every bar, you will be able to get vital details including the highest price, the lowest price, opening price and the closing price for a certain period.

Candlestick

This is the most popular among the three chart types and is commonly used for technical analysis. Each candlestick represents a timeframe. For a rising price, the closing price and the opening price for a period can be determined from the body while the highest price and the lowest price for the period can be verified from the candle’s wick and tail. A green candlestick indicates a rising price while a red candlestick signifies a falling price.

Advanced Trading Strategies

Hedging

This is one of the most important strategies to execute in forex trading. With hedging, you are taking action to secure your open positions from any possible changes in the value of your selected asset that could revert what could have been a money-making position. For example, placing a short position and anticipating the prices to go down has a potential risk of rising prices and you could possibly incur losses. With the use of hedging, you can significantly lessen this risk and protect your trade from losing all the money you invested in this position.

Position Trading

This strategy is commonly used by forex traders that prefer long term positions since there’s no need to monitor the market in the same way that is done on a short term trade. Long term trades generally holds a position for longer periods and this could take days, weeks or months. By employing technical and fundamental analysis and using advanced charts, there is a high potential to make a profit with position trading.

 

Implementing Advanced Trading Strategies

When you are trading on an asset, regardless if it is a currency pair, commodity, stock or index, you are basing it on market sentiments. By being able to decipher these elements with fundamental and technical analysis and taking all these factors into consideration, you will be able to implement a sound trading strategy that will make you a very profitable trader.

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