3 Forex Strategy Used Professional Trader : HOW TO TRADE ON THE FOREX MARKET
Talking about forex trading means also talking about various information about trading strategies that you can get on the internet. However, in reality not all strategies that claim to be "great" can actually work.
In this article I try to summarize at least three strategies commonly used by professional traders.
1. Trading When There is a Powerful Fundamental Factor
This method exploits the market response when there is a release of economic data. The market will usually move more volatile if the numbers from a given economic data are announced better or worse than expected.
For example, if US non-farm payrolls (NFP) data is released better than expected, the USD will typically rise significantly in at least the first 20 minutes. Conversely, if the data turns out to be worse than expected then the USD will usually weaken sharply. Thus, the counterpart or "currency pair" usually will move up or down sharply as well.
If for example due to the USD data strengthened, then pair like EUR / USD, GBP / USD, AUD / USD and NZD / USD will move down. Thus, in order to gain profit from price movement after the NFP data release, traders open a sell position on the pair.
The most commonly used economic data for implementing this strategy is usually US NFP and Fed rate decision.
2. Using "Figures" as a Support / Resistance Guide
What is meant by "round number" here are price levels such as 1.50000, 1,0000, 0.50000, 100,000 and so on. While the considered "not round" is the price as we used to see, such as 1.38775, 1.58837, 139.387 and so forth.
This "round number" is also often referred to as the "psychological level" which is usually the key support or resistance area.
For example, when you see the price move above that psychological level area, then that level becomes the key support. You can open a buy position with a stop loss reference in the psychological level area. Conversely, if the price breaks below that level, you can actually get a chance to open a sell position.
3. Using a Combination of Technical Indicators
This is often referred to as a trading system. Professional traders usually use some technical indicators at the same time with the intention that one indicator can cover the weakness of other indicators so that the resulting signal is expected to be more confirmed.
For example, you can see the technical analysis applied by the FOREXimf.com Market Analyst team. There we use Stochastic Oscillator, Commodity Channel Index (CCI), Moving Average and Fibonacci Retracement.
Moving Average (MA) is used to help strengthen the bias. If the trend is obvious (eg uptrend or downtrend), then MA will function as dynamic support or resistance area. However, if the trend tends to be difficult to determine, then the MA may provide clues, roughly whether the intraday bias is bullish, bearish, or neutral.
In addition MA can also collaborate with Fibonacci Retracement to provide good entry area information. Actually the reference area for entry market can be determined from Fibonacci Retracement only, but if it is reinforced by MA, that is when Fibonacci Retracement reference area is intersected with MA area, then that area will be more valid to do market entry.
Meanwhile stochastic and CCI serve as "trigger" or "trigger", which gives signal to open position (buy or sell). When the price is in the reference area, then you are just waiting for confirmation of buy or sell signal from stochastic and CCI, according to its intraday bias.
Fibonacci Retracement also serves as a reference to prepare for anticipation if it turns out our analysis is wrong. A break of key support or resistance based on Fibonacci retracement will change the intraday bias from bullish to bearish or vice versa. It should be a "warning" if you have already opened a buy or sell position.
In order to optimize your forex trading, you should find a strategy that really suits you. In accordance with your character, in accordance with the strength of your capital. Do not try to force yourself to use other people's trading strategies that do not suit you. Although such a strategy can work well when used by the person, may not be successful on you, because it is not necessarily suitable.
Nice blog... Thanks for providing information about trading strategy. I found this information valuable.
ReplyDeleteSaar Pilosof