What is a strategy? That is the first and most fundamental question you have to answer if you want to be successful in Forex Trading.
A strategy is simply a well-thought-out plan that you outline through research and experience and use to direct your future actions.
There are many trading strategies that you could utilise as you get into online trading, including fundamental and technical analysis. This post serves to highlight the top 3 powerful strategies that you can implement when trading in Australia.
A Breakout Strategy
A breakout strategy is a simple strategy, but one that serves online traders well. Put simply this strategy can be effective when you are looking for new trends in the market. This type of strategy is one that often highlights early signals in the market and can be used to inform a trader to make a move.
The market is designed to have highs and lows, otherwise, the market would continuously trade sideways and move nowhere, which would mean no money would be made. However, previous highs in the market can be broken and lows can take a sudden turn. Many experienced traders will see these as an important signal for a change in the market and this is where they will choose to make a new move.
A Bounce Strategy
A bounce strategy is one that relies on keeping focused on the history of levels within the market. Keeping your eye on past levels and movements of Forex currency pairs can help you determine if there is a potential trading opportunity.
Utilising this strategy means that you use past market levels to determine when there is a trading opportunity. If for example, a market dropped and then bounced, this could be viewed as a sort of bargain. Therefore if a pair falls back to the same level as it did previously this could be an opportunity to make a trade.
An Out-Of-Steam Strategy
In much the same way as a drop in the market on a previous day can signal an opportunity to buy, when a market starts to reach its peak this can also signify a potential drop in the market and an opportunity to sell at a profit.
Utilising an out-of-steam strategy is a straightforward process for even a novice trader. By simply watching the trends in the market, traders are able to determine with some level of probability, what will happen in the future. For example, if a market reached its peak and then started to fall, the overriding thought would be that that market began to get too expensive. So if the same market starts to reach that peak again, a trader will simply sell short of the peak in order to make a profit before the market falls as it did in the past.
As with any strategy that you put in place, the most important thing to remember is that nothing works all of the time. A strategy is only useful if you are prepared to keep in mind that using your chosen strategy is simply a way to manage the risk. Any time you choose to take a risk there is always a chance that you will win and a chance that you will lose.