Although we repeat it for a long time, many beginners still wonder why strategy is so important in forex trading.
Without a proper trading strategy you end up investing in the wrong way and then crying over the money loss. This is true for both currency market and other financial markets.
There are lots of traders who start trading in forex and only a very small part gets over the first year of operation. The reason is that you begin to invest without having ‘studied’, without any technical basis but especially without a strategy that can compensate adequately the risk of each transaction.
Considering the Forex trading industry in Italy, it is important to know as much as you can about the market you are going to trade. Usually, top forex brokers help you also with that.
If you want to achieve important results you have to develop an effective strategy to follow without being dominated by emotions. This is the perfect starting point.
Traders who intend to trade in Forex market will then study a trading strategy depending on the profit expectations and the trading style they want to undertake.
We must consider also that sometimes a good strategy is not enough. There are moments of volatility and contingencies that make unnecessary any plan. The secret is to minimize losses at the occurrence of these events.
Here is a list of 5 winning strategies for trading forex.
Day Trading allows you to open and close positions in the same day. It is also called intra-day trading. The main advantage of day trading is that you do not pay commission to keep open the position at night.
Since these transactions are usually made within hours there is not a large movement of capitals and consequently the percentage of the gains are not so high.
This category of traders follow closely the economic calendar and use a very interesting tool such as technical analysis, which helps to track down the best entry points.
It is a very profitable way to operate but also risky, so we do not recommend beginners to act with these criteria.
It is a very active form of day trading. Scalping is characterized by the opening of many intra-day positions of the duration of minutes or second. All mini revenue of the day will flow in a daily gain.
Scalpers in forex will spend most of the time in front of a computer to not miss a single change in the markets. For those who make scalping it is important to have an economic calendar under control, to take advantage of all opportunities.
Scalping is a type of trading that can be very stressful because trader is always under constant pressure and has to take decisions in a few seconds.
It is a method of working that has not so much to do with investments and many Forex Broker in Italy forbid it.
The Swing Trading is characterized by positions open for a period which can vary from several days to several weeks.
Who does swing trading tends to have a normal level of operation: many of the operations also depend on macroeconomic data, which can create a rise or a decline in the short term. So there will surely be weeks in which the trader will have greater operability and other weeks more “quiet”.
Traders, who follow this style, usually seek the technical analysis and price action.
Position Trading entails that positions are kept open for a period of time varying from several weeks to several months.
Those who can trade positions have a very low operational level: they often open only a couple of positions in weeks, aiming to take advantage of the strong trend.
Traders who use this style, according to their trading style, have the possibility to use different tools to analyze the market (weekly or monthly data).
Carry trade aim to make profitable the interest rate differences between two currencies for a specific cross. Basically, the principle is to invest in a low interest rate currency and then place these funds on a currency that has a stronger interest rate.
Different interest rates are fixed individually by the major central banks. However, traders can consult interest rates in real-time in the sites of all top forex brokers in Italy.
The application of the carry trade requires the knowledge of the markets and a good anticipation of trends. The carry trade operations must be undertaken as quickly as possible to avoid any change in trend and possible losses.
It is important to understand that strategy is as important as choosing the best forex broker. Now it is up to you to figure out which is the strategy best suited to your style of trading.