By Cedric Welsch
There are many variations on the basic Forex strategies that people use when trying to maximize profit potential in a foreign exchange trading account. Of course, the purpose of setting up and trading with a Forex account is to increase the value of the account. While some people may jump from one system to another, never giving one the chance to work before trying a second or third method of currency trading, this practice is unlikely to give you long term capital growth. The following tips are based on sound principles to improve your Forex results.
With any market transaction, one of the most basic strategies is to buy low and sell high. This seems self explanatory, but many novice traders wait to jump into a trade when it has reached the peak or the low point of a cycle, thinking that there is always going to be room for profit in the trade. While this is true, you need to track and understand the cyclical nature of the price movements, in order to time your entry and exit points.
You can follow the trend, or you can trade as a contra-trend guru. Either way will work for you during most times in the market. If you have the capital to wait for the price line to turn, you can eventually exit the trade with at least a break-even record. Unfortunately, many beginning traders may not realize that a small profit, repeated many times happens more commonly than one giant price move.
Use the trend to your advantage. For many years in many markets, a saying that is popular reads “The trend is your friend”. Whether you trade with or against the trend, you can use it to set limits on losses and on profit points.
Use the indicators that are available. Most Forex platforms have various indications built in. You may be able to find moving averages, volume and volatility indicators, just to name a few. Even the simplest of these indicators can be utilized in building a strategy that works for your trading style.
Slippage can affect your strategy and your profits. Slippage is the term applied when the time between when you submit the order and when it is filled is long enough that your profits are reduced. Find a broker who is willing to talk about slippage before choosing a website.
Regardless of your specific Forex strategies, you should always minimize risk. A good rule of thumb is to only trade with five percent of your available capital. If you follow this rule, you are unlikely to lose more than you can afford.
About the Author
The uprising of forex techniques will always make things a little extra competitive to all.
Whereas, you as a wise trader, must always look at the fundamental fx trading strategies.
