Forex strategies

Forex strategies

Forex systems and forex strategies

Forex strategies

If you already understand the basics of forex trading, you are ready to develop your own forex trading system. Most forex strategies attempt to predict a future exchange rate. If a trader expects a foreign currency to appreciate, he or she buys it and then resells it with a profit. This is called a “long trade”. If a trader anticipates a foreign currency to lose its value in the future, he or she would sell it now. This is called a “short trade”. Of course, financial markets are noisy and no one has been able to anticipate all the price movements perfectly. However, if the win/loss ratio is high enough to offset the inevitable occasional losses and the transaction costs (spread), a forex system is profitable. Assuming a low spread, the only thing you need to become a thriving trader is a forex strategy slightly more successful than simple tossing of a coin. Whenever you are consistently better in predicting the foreign exchange market's behavior than you would be by pure chance, your forex trading strategy is profitable.
Forex strategies
Based on the employed forex system, the profit (and loss) can be realized anywhere between seconds and years. As I explain below, forex strategies also differ in how they predict the future exchange rate. But in general, almost all the forex systems may be roughly divided into those suitable for a ranging market and those suitable for a trending market.
Forex strategies