The forex market offers a lot of benefits to those who have the guts to accept its challenge. Making money off of currency movements is not easy, but there are effective forex trading strategies that beginners will surely find excellent for their forex career success. Check them out below.
Following the Trend
One of the arguably simplest forex trading strategies is following the daily or weekly trend. This is very often used by beginners and even experienced traders, giving them huge gains and excellent benefits if the strategy is followed and done correctly.
What you have to do for this strategy is review the daily and weekly charts and find a trend that appears to be well supported and then get in in that trend.
The one thing you need to be careful of with this strategy is that your moves that appear small on the chart can span even 100’s of pips. What this tells you is that you have to trade small. You have to use a conservative allocation when you start to buy in and then just let your trade develop a bit. Set up a reasonable stop and plan a target.
This strategy is easy for beginners since they do not need to monitor the market all the time. That means they can simply trade anytime they want.
Carry trading refers to the activity of buying and holding a currency that pays a high interest rate against a currency that sports a low interest rate. Every day a rollover is given for the interest difference between the two currencies.
The benefit is that even when your trade is virtually not moving, the money is deposited into your account every day. In addition, because most forex trades are leveraged, you get paid on the size of your trade, not just the size of the capital that you have.
The disadvantage of carry trade is that in most cases, the differences in interest rates are not that big when compared to the risk that you are taking. On top of that, the currencies which are typically good for carry trading usually have a strong reaction to the any news that presents a risk to the global markets.
Basically, when conditions are right, the pairs will rise. When something negative suddenly happens, these pairs will fall down and plummet very fast. And if you are using large leverage, you can wipe out your account in a snap.
The forex market moves all the time, 24 hours a day, and 6 days a week. Even if the trading times when trading volume is highest are specific, the forex market is still certainly moving at other times.
Depending on the currencies that you wish to trade, you can select the ones you like and choose your time. Most day trading techniques revolve around forex technical analysis, which has a lot of benefits.
The forex market can be very technical. If you have a quick reflex, sharp senses, and you know how to create and stick to a plan, you can reap benefits from it.