Forex Strategies.In this article Descubrrás the 10 strategies or basic tips you should follow to succeed trading in Forex currency market:
1. Mapping market trends and price ranges
Use long-term framed graphics to decide between fluctuating trends or markets. Start the analysis with daily, weekly, monthly charts, and even considering several previous years. A large-scale graphic shows essentially the life of the market and provides a much clearer perspective of the long-term market situation.
10 Basic Forex Strategies
Once the long-term market situation has been analyzed, graphs can be analyzed with short-term temporary frames. Remember that the random factor in Forex is much greater the lower the time frame of a graph. Successfully predicting price behavior in short-term temporary frames is much more complicated. It is generally better to operate in the same direction than trends in the medium and long-term, even if it is only operated in the short term. If there is no strong and defined trend, it is better to move on to other types of strategy.
2. Follow the trend Forex Strategies
Once you have determined the trend, you should only open positions in the direction of it. Market trends can be a long, medium or short term.
You must first decide what kind of strategy you want to follow: long-term or shorter time. This decision will determine the type of graphics you should use. But the strategy will always follow the trend.
In case of being a bullish trend, you will expect regressions in the price to buy the pair, to ensure a good entrance fee. In case of a downward trend, we will wait for a recovery in the price, before selling.
3. Locating support and resistance levels
Find the levels of support and endurance. The best thing is to buy near the levels of support and sell near the levels of resistance. The resistance level is usually a maximum point reached previously by the price of the currency pair.
When a resistance is finally rotated upward, it automatically becomes a stand. Also when a support is broken downwards, this becomes turn into a resistance.
4. Kickbacks or corrections Forex Strategies
Usually the correction of the market, up or down, runs through an important part of the previous trend. Corrections can be measured in an existing trend in simple percentages. A fifty percent trace of a previous trend is the most common.
Fibonacci retracements of 38% and 62% are also two of the most often-followed levels by Forex traders, including large-volume investors, such as banks or financial institutions.
5. Trend Lines Forex Strategies
One of the simplest and most effective graphical tools is trend lines. Draw a straight line that joins two dots on the chart. If the trend is bullish, the line is drawn below uniting two or more low points.
If the trend is bearish, a line is drawn above the graph equally by joining two or more double crochet. Prices often respect these trend lines as they approach them.
When a trend line is broken, this is often indicative of a general trend shift.
6. Moving Stockings
Mobile stockings often offer signs of buying and selling, which is why it is important to keep them in mind. With the help of the moving stockings, it is possible to determine the state of a current trend.
One of the most common ways of using mobile Medeas is the use of two different means in the same graph, and wait for the crossing of both.
If for example we have an upward trend and the prices were in a correction, at the moment when a faster-moving average (of 10 days for example) crosses upward a slower moving average (of 20 days for example), this is probably a good sign of purchase.
Oscillators help us identify markets in a state of overbought or oversold. While mobile stockings provide a confirmation of the market trend, oscillators can often tell you the right time to open an operation.
Two of the most common oscillators are the Relative Force index (RSI) and the stochastic. These two oscillators operate on a scale from 0 to 100. When the RSI is above 70, there is an effect of over purchase, and when it is below 30, it is an indicative of oversold. The overbought/oversold values for Stochastics are 80 and 20 respectively.
One of the most useful signals that oscillators provide is the famous divergences. A divergence occurs when the direction of the oscillator signal differs with the direction of the price. Such situations are generally a strong indication of a change in market trends.