Basics of Currency Trading the Forex Trading Strategies

Basics of Currency Trading the Forex Trading Strategies

The trader, after an extensive analysis, decides there is a higher probability of the British pound to go up. He or she decides to go long risking 30 pips and having a target (reward) of 60 pips. If the market goes against our trader he/she will lose 30 pips, on the other hand, if the market goes in the intended way, he or she will gain 60 pips. The actual quote for the pound is 1.8524/27, 4 pips spread. Our trader gets long at 1.8530 (ask). By the time the market gets to either our target (called take profit order) or our risk point (called stop loss level) we will have to sell it at the bid price (the price our broker is willing to buy our position back.) In order to make 40 pips, our take profit level should be placed at 1.8590 (bid price.) If our target gets hit, the market ran 64 pips (60 pips plus the 4 pip spread.) If our stop loss level is hit, the market ran 30 pips against us.

It's very important to understand every aspect of trading. Start first from the very basic concepts, then move on to more complex issues such as Forex trading systems, trading psychology, trade and risk management, and so on. And make sure you master every single aspect before adventuring in a live trading account.

The trend prices keep moving until it breaks the resistance level. When currency breaks the resistance level, the price will be rising for some time. And when the currency breaks the support level, the price will be decreasing. If you can find it in time, you will be very lucky person and have big profits.

There are internal and external factors that influence on the trend changes. To see that you need to know the main factors and realize that it depends on technical and general reports.

The most reliable way to define a trend in time is charts analysis. For determining support and resistance levels, you need to analyze the chart of the prices at different time intervals. The longer chart and intervals are, the more reliable your analysis would be. Then the traders use these levels to make decision on some currencies.

Another method of trend identification is mean values analysis and shifting. The mean value shifting can give you better overview of price changes. When the price moves over the mean shifted value, it could go to the next level.

The rules of the Forex trading strategies are the following:

Do not risk bigger amounts as you may lose all your money. every experienced trader warns you never put everything.

Do not risk amounts bigger than 2% of your trade account. For example, you have received $300 on your account but you need to risk about $15. well, do it, but limit yourself with 2% as your account will grow.

Always put stop-losses. But if it is not clear where to set stop-loss, do not make a deal.

You should know your exit point before you enter.

Train on the virtual account before open the real one.

Control your emotions. You can rule the system only with clear mind.

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