A Guide to Identifying Which Trading Strategy Is Right For You
In forex trading, a trading strategy is basically a calculated plan which is meant to attain a certain profitable return by going either long or short in various markets. However, the reasons that such a well-planned trading plan helps are its consistency, verifiability, quantitatively, and marketability. The consistency of such a plan is quite evident because even if a trader deviates from the market plan slightly the results can still be sustained and continue to rise. Conversely, breaking a trading plan in half because of a minor misreading of the market signals can result in the trader being far from his trading objective and far from any profit.
A third trading strategy that proves to be very consistent is news trading strategies. News trading strategies rely heavily on news releases when formulating their overall market expectations. The basis for such an expectation is the performance of already established trends. News trading strategies are typically employed by traders who expect market movements to continue in a particular direction for some time yet. They then look to see if the market expectations of the trend line are similar to the actual market movement. If so, such a trader will set his or her market expectations along the trend line and continue with the plan.
Price Action Trading Strategies (PAts) are also very consistent. Price action trading strategies depend on the ability to monitor the price activity of a security through the use of natural signals as well as other technical analysis tools. However, before a trader can formulate the best trading strategies he or she should master the proper interpreting of the signals being displayed. There are a number of signal generators which can be used for Price Action Trading strategies. However, it is always advisable that one sets his or her expectations in terms of the expected behavior of the security since such an evaluation is largely dependent on the market perception of the price action of that security.
Market Hypothesis Trading Strategies (MHTS) are developed based on the idea of market expectations. Market hypothesis believe that the prices of securities react to the changes in market expectations and consequently to the changes in market values. There are a number of techniques used in this strategy including trend lines, volume and time indicators as well as support and resistance levels. However, market expectations should be clearly defined so that the process can be effectively implemented. Since market changes are considered to occur regularly, this strategy does not require too much analysis.
Directional Trading Strategies (DTS) are designed so that they follow a single economic indicator. In addition, they provide a means of keeping an eye on currency trading trends. These are arguably the best trading strategies to use since there is nothing which requires too much analysis. However, this type of strategy does require a continuous monitoring of currency markets and therefore may not be the best option for novice traders.
Price Action Trading Strategies (PATS) is strategies designed for making consistent profits from price movements in the markets. They work well when traders are expecting price movements which will result in profits over time. Some of these trading strategies attempt to take advantage of price movements which occur without users having to do any analysis. However, these strategies make little profit unless users are able to predict when market prices are likely to change. The major benefit of Price Action Trading Strategies is that they offer fast returns and are relatively easy to implement.
One of the most popular trading strategies is called the scalping strategy. This strategy is suited for people with limited time on their hands. It is best suited for those who anticipate quick changes in the markets and those who trade infrequently. Although it may seem risky at first, scalping can prove to be a very lucrative strategy. Those swing traders who successfully implemented this strategy have made significant gains.
Most Forex traders adopt one or more of the trading strategies stated above. However, there are still many other trading strategies available for traders to use. Traders should experiment with the different strategies to determine which ones they are most comfortable with and which ones they feel provide the most profit potential. Once traders learn how to correctly identify buy and sell signals, they will become very successful.