This article shows us the different strategies and ways by which anyone can be able to trade easily. This is basically for beginners who are looking towards the ways of FOREX trading. In particular, this will lead towards three main strategies due to which any of you will take step towards the trading. The strategies that beginners can use are named as THE BREAKOUT STRATEGY, THE MOVING AVERAGE CROSSOVER STRATEGY, and the CARRY TRADE STRATEGY.
The FOREX EXCHANGE MARKET is highly loaded with a vast number of participants. As it is a well-established market, the match of both fame and time has concluded in professional FX traders. Day traders who simply are in search of beginners guide to learn about FOREX trade. To enhance the skills and knowledge about trading we have given below three major strategies related to beginners.
Keep in mind that, simpler the strategy, the ease is on its peak for the new arrivals. After getting the skills you have a lot of time to know more about complex actions.
Three Beginner Forex Trading Strategies:
Two of them are fair enough to go with them as they follow all the upcoming trends. The third one is a bit different as it gets profits from different markets, rather than market directions.
But first, we need to know what trend means?
To be very precise, it is a way for the market to move in a continuous flow in the overall direction. Many of the FOREX TRADING STRATEGIES which are into work have the same methods. By following trends you get great profits. In fact, there are many professionals who create track records using such systems. Along with this, there are few cons as well.
-They are difficult to get attached.
-Larger trends are most common.
This shows that strategy tends to make vast losing trades. The theory is simply showing that these losses will be offset by more uncommon but larger gaining trades. Side by side if the trends break down, so you need to share your huge profit back. You have heard the phrase “THE TREND IS YOUR FRIEND “not knowing the full expression, adding “UNTIL THE END “. When the trend fails it means you are on end. The major thing to notice is that you need deep pockets to use it in a proper way.
So following the trend for the beginners is compulsory while trading by FOREX, but along with this, it is not so good for the less wealthy beginners. Heading towards our strategies.
The first one is to identify when trend forms. That looks price breakouts. It mostly happens when markets go out of range. When a new trend arises, a breakout must occur. But not all breakouts tend to new trends.
In FOREX, every simple strategy is used with risk management. The long turmoil can help to know the highest high and lowest low. This suggests a longer trend. So it is up to you to ride a trend initiated in the curve, but you need to go by shorter-term trend.
Moving Average Crossover:
Our second strategy for the initials uses a simple moving average (SMA). SMA stands for a lagging indicator the uses aged data than most strategies and takes small steps as compared to the market. SMA is averaged over the period is too small. For FOREX TRADING we use 25 days moving average as our shorter SMA, and a 200 days moving average for our lower one.
The final strategy is important to get familiar with. It is specifically for the use of professionals, so it is not for the beginners use. In short, it is a profit from the difference between the two currencies. To know more, let us consider someone who is physically involved in currency exchange.
Imagine that a trader borrows a sum of Japanese Yen. Due to the low Japanese interest rate, the debt of having this negligible. So for this trader needs to convert it into Canadian dollar than it proceeds into government bond, which yields 0.6%. The interest getting from the bond should exceed the cost of financing the Yen debt.
I hope you get enough knowledge about the simple strategies for the beginners.