- March 23, 2018 at 6:33 am#52809vickymackParticipant
Forex is the short form of foreign exchange. The term refers to the activity of buying and or selling one currency for another. This trade has been on the rise as many individuals and companies from different places across the globe are all taking part in it.
Trading in forex can be done in different ways. Most of these ways rely on leveraging which is the act of using borrowed money to make some income. While leveraging, one can make lots of money or accrue huge losses after losing all the investments. There are different methods of forex trading and each comes with its fair share of potential benefits as well as threats.
Top 4 Forex Trading Methods
Auto Forex Trading
This is an automated method of forex trading and there are many ways of accomplishing it. All the methods rely on a signal from the trade advisor program which basically gives alerts on trading recommendations that have been built into the software.
While some successful forex traders do use and indeed do recommend these programs, others feel that they can do a better job responding to the market climates than a mere computer program. Before making the decision whether automated trading is the right option for you, it is important to do so with the account used for practice account before taking the risk with your investments.
Forex Day Method of Trading
This is a method of trading that is based on the possible impact of breaking news in line with the technical indicators. This method requires a notable experience and skills.
Just as is the case with automated trading it is important to practices with a demo account before taking chances with your capital. Assess your results and see how you are fairing after practicing for time. If there are all indications that you are making money in the demo account, then you can consider taking the earned skills and experience to a real account but even then; be careful about the amount of money you put at risk, well at least for some time.
Trading On the Big Picture
This is the ideal method for investors who want to trade over long timeframes. With big picture trading, you study the currency pairs and their trends over a given period of time rather than over short trends on the market. Many traders on forex trading Singapore use this method of trading.
Scalping Forex Trading Method
This method relies heavily on the small gains from the huge trades. It is more or less like day trading. Scalping is better done by computers than by human being in person. As such, using automated scalping is the best way of keeping track of all the possible gains and doing all the mathematical calculations. In scalping, the investor seeks to beat the bid and make a profit before the close of the business which takes just but a few seconds before closure.
The Importance of Price in Forex Trading
The best forex trading strategies are reliant on price action. This is why it is important to do a technical analysis as a forex trader. There are two ways of doing a technical analysis; one is through trend following while the other is through counter-trend. Both methods aim at making profits by maximizing on the price trends.
The best price trends are those that allow you capitalize on supportive concepts and resistance. Support can be defined as a market’s possibility to go above a previously identified low while resistance is the falling from a previously identified high.
When these changes occur, an investor isable to predict future prices going by the recent trends in the highs and the lows.
When the prices are down, the buyer is interested in buying what he/she sees as cheap. When the market takes the highs, then the sellers are attracted to that which is expensive as it is a good avenue to lock in profits. As such, basing on the most recent highs and lows, an investor is able to evaluate the prevailing prices.
Understanding the above methods and how each one works will help you understand how to trade in currencies better and for better money while decreasing the chances of you losing your investments. Do not take any chances with a real account; familiarize yourself with each method using a demo or practice account. When you feel you have learnt and understood how to choose the currency pairs and so on, then you can dip your feet in the forex trading business confidently.
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