The (Foreign Exchange) Forex Trading Market Explained.

FOREX Trading Strategies

Any FOREX trading system requires individual choices

To be a successful FOREX trader you need a trading strategy.  There is no one set strategy that is good for all traders; rather, each trader needs to develop his or her individual approach to the FOREX.  Some traders rely solely on technical analysis while others prefer fundamental analysis, but many successful FOREX traders use a combination of both to get a broad overview of the market and for plotting entry and exit points.

Technical analysis relies on one key concept: Prices move by trends.  The common saying in FOREX is 'The trend is your friend.'  Market movements have identifiable patterns that have been studied over many years and a thorough understanding of these trends and how they can be read forms the basis of a good trading strategy.

forex trading strategies in a forex trading systems

There are many analytical tools available to understand market movements.  The beginner FOREX trader is well advised to study each one separately for getting a working knowledge of their concepts and application.  Once one has been understood, keep on using it while studying others.  Each tool tends to reinforce the others.

Support and Resistance Levels are used in many FOREX trading strategies.  'Support' refers to the price level that is repeatedly seen as the bottom – when the price reaches this level it tends to rise.  'Resistance' levels are upper prices that the currency rarely trades beyond.  Support and resistance levels contain price movements for a period of time. 

When currency prices break through support or resistance levels, the prices are expected to continue in that direction.  For example, if the price rises above the previous resistance level, it is seen as bullish – the price should continue to rise.
To find support and resistance levels, price charts need to be analyzed for unbroken support and resistance levels.  Charts can be analyzed in any time frame; however longer time frames establish more important support/resistance levels.  Traders can use support/resistance levels to determine when to enter or exit a transaction.

Moving averages are another common tool in FOREX trading strategies.  The simple moving average (SMA) shows the average price in a given period of time over a specified period of time.  Moving averages serve to eliminate short term price fluctuations giving a clearer picture of price movements.  FOREX traders can plot a SMA to determine when prices have a tendency to rise or fall.  If prices cross above the SMA they have a tendency to keep on rising.  Conversely, prices below the SMA have a tendency to continue their downward motion.

These are two examples of trading strategies that can be used individually or in combination.  In practice, the FOREX trader should have a repertoire of trading tools to examine market conditions and to support the findings of one study or another.  If several indicators show that the market is moving in a particular direction the trader can act with more assurance than when relying on a single indicator.

Similarly, fundamental analysis can be used to reinforce technical findings, or vice versa.  Ideally, the FOREX trader will take several indicators into account when plotting a trading strategy.

A Forex trading system is not generic and requires individual game plans.

Every trading strategy should provide clear guidelines about when to enter a trade, what to expect in terms of market movement, when to exit a trade, and how much loss can be accepted in case the deal moves against the trader.  Following these simple guidelines and learning about technical analysis can help you become a successful FOREX trader.



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Introduction to Online Forex Trading
Current Forex Currency Rates
Forex Trading
How to Get Started In FOREX Trading
FOREX versus Futures Market
FOREX versus Stocks
FOREX Trading Philosophy
Fundamental Analysis In Forex Trading
Forex Technical Analysis - Part 1
Forex Technical Analysis - Part 2
FOREX Trading Strategies
Trading Currencies on Margin
Currency Option Marketplace
FOREX Signals
How to Read FOREX Quotes
Calculating FOREX Profits and Losses
Risks of FOREX Trading
FOREX Training
FOREX Trading Software
FOREX Brokers
FOREX Glossary
Forex Updates and Training
Crash Course in Forex Education
How to Recognize Patterns in Forex Trading Markets
Defining Exotic Currencies and Their Impact on Forex Markets
Defining Trading Trend and Ranges in Forex Trading
Mind Games – The Psychology of Forex Market Trading
Crossing Currency - What’s This Mean to Forex Traders
Money Management Basics for Forex Traders
Choosing Your Forex Broker
Expensive Beginner Forex Trader Mistakes
The Elliott Wave Theory for Forex Markets
Failsafe Facts to Guarantee Failure in Forex Trading
Five No Nonsense Strategies in Forex Trading
Global Expansion and It’s Reaches within the Forex Market
Hedging in the Forex Market
The Important Ways to Keep From Losing in the Forex Markets
An Overview of the Euro’s Performance in the Forex Markets
Six Trading Tips for the Forex Newbie
The Lowdown on Day Trading
Interpreting How Interest Rates Drive the Foreign Exchange Markets
The Basics of the Bollinger Band Technical Indicator in Forex Markets
Relative Strength Analysis in Forex Trading
The Basics on Understanding Forex Options
Forex Charts – What Are They and How Do You Read Them
Interpreting the Future of the Oil Marketplace and How It Affects Forex Trading
Top Five Economic Indicators that Drive Forex Trading
Rules for Trading in Forex Markets
How Does the Japanese Yen Stack Up Against the US Dollar in Forex Markets
Pivot Points in Forex
The Ins and Outs of Trying Out a Forex Demo Account
The Top Currencies to Watch in the Forex Trading Game
Defining Moments Regarding Trading Trends and Ranges with Forex
Top Ten Basic Terms in Forex Trading and Their Definitions
Forex Folklore Investment Myths in the Market
Five Economic Driving Forces that Influence Forex Trading
Day Trading All You Wish You Did Not Have to Know
Time line for Daily Forex Trading When are the Optimum Moments
Forex Relative Strength Analysis
How Forex Quotes Can Influence your Trading Tactics
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