For Traders; Four Most Effective Forex Trading Strategies

The primary motivation in Forex trading is the possibility of making profits. This motivation has led professional traders and experts in the Foreign Exchange Market to come up with methodologies which are meant to boost their profits when trading. There exists a large number of strategies have been successfully employed by traders with each trader preferring a specific strategy or at times applying two strategies at the same time. These fixed verified strategies are primarily meant to assist a Forex trader achieve profitable returns. Below is a list of the most effective Forex trading strategies.

  1. The Divergence Trading

This trading strategy is based on the assumption that movement of oscillating indicators does not trail the actual price movement. There are occasions when a price makes higher peaks while the indicator records lower peaks and these inconsistencies are used as good trade signals by veteran traders. Before deciding whether to enter or exit a trade, divergence traders have to assess the indicators and are constantly in search of better indictors that will accurately display divergence. Multiple oscillating indicators are in other cases also used as added confirmation.

  1. The Trend Trading Strategy

In the Foreign Exchange Market, the price movements that exist include the uptrend, downtrend or the sideways trend. The trend trading strategy is based on the assumption that the prices in the market move in a trends. The upward and downward movement of prices is often considered advantageous to traders. In trend trading, indicators that are highly sought after are those that cover the actual price as they are responsible for give away the direction of the price movement.

  1. The Price Action Trading Strategy

The profit and loss that a Forex trader makes is directly affected by the prevailing prices in the market. The leading indicator in the Price Action trading strategy is price and it is based on the assumption that price patterns repeat themselves because they are ostensibly a repeat of human behavioral patterns. Expert traders who use this strategy stress that price observation is the only sure way in which traders can gain an insight into price movements in the market.

  1. Breakout/Support ,Resistance/Supply, Volume and Demand Trading Strategy

This strategy is based on the assumption that price bounces out of a definite level. The price can also be assumed to break out of a consolidation epoch. Traders who use this price are usually very convinced that prices will always either bounce or break through. Traders are known to take advantage of this by spanning on the edges of their positions during the consolidation period in bid to widen their profit margin.

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