Find the Right Currency Pairs
Arguably, the biggest first step to a successful forex strategy is finding good currency pairs to trade. And while the best ones will change day to day, most of the following currency pairs are generally good.
Euro versus the US dollar can lead to good profits, as can the US dollar versus Japanese yen. Finally, the US dollar versus both the Canadian dollar and the Swiss franc can lead to nice payouts if you know what to watch for!
With these currency trading strategies in place, you’re taking your first step into a larger world.
Success in the world of forex trading is all about understanding trends. This is one strategy that works equally well for the short-term and the long-term.
It basically involves following certain currency exchanges and understanding “resistance points.” This is the point at which a price was falling or rising, and then it turned around.
Once you know these resistance points, you will know what to look for. When you a price exceeds that resistance point by three pips or more, then a trend is emerging. Take advantage of it while you can!
Risks and Ratios
The key to any kind of successful trading is risk. As you make more money, you have to figure out how much of your profit to risk on future profits. Choose wrong, and you might just lose it all!
As a rule of thumb, you should be willing to risk anywhere between one and four percent of your account balance on each trade. This range means that you can start out on the smaller end of that and work your way towards the higher amount as you become more confident.
Another important tool in your forex toolbox is “swing trading.” This makes for a good long-term strategy for veteran traders, but it is particularly good as a strategy for beginners.
Remember those resistance points we talked about? This strategy starts with you developing your own mental resistance points for various trades after a value has gone dramatically higher or lower.
The game is simple: you wait for the momentum to shift back in the other direction. The strategy here revolves around the idea that drops in value are often temporary:by keeping a close eye on the market, you can embody the classic “buy low, sell high” strategy that powers all investment.
Successful Forex Strategy: The Bottom Line
Now you know how to start building a successful forex strategy.
PS. For those of you to lazy to create your own successful forex strategy feel free to check out these free forex signal providers!