When trading using FX, the amount of liquidity and low transaction costs are among the major benefits that you can enjoy. The fact that you can trade for 24-hours each day means that you are able to adopt and apply several types of strategies in your trading.
While trading forex using FX, you are able to use many different styles and methods and below are 2 very simple and easy-to-follow strategies.
Initial Entry for Long term investment
The first is called Range Trading. This is where the trader will buy a currency which is in the market, hoping that the return is a longer-term average of the valuation. It is somewhat similar to value investing where the aim is to first identify the price points that you are interested in. This is where you want to enter the market at the point where the sellers stop selling and buying of the currency is starting to develop.
You will have to identify the levels of supply and demand before obtaining the price point that you favour. This is usually carried out using the very common technical analysis method.
Another strategy is known as Trend Trading. This is one strategy which is very popular among new traders while experienced ones tend to use Trend Trading as they are easy and is often regarded as almost a sure-win move.
In this strategy, you have to first identify the direction of the prices of the currency which is moving in the market. From there, you will place your trades in the same movement mainly because when it is a ‘trend’, it is supposed to produce very significant results.
Not all about luck
The idea behind using trend trading is that you no longer rely solely on guessing because it is not all about luck. Speculating markets cannot work if it is all about guessing especially if you are in for the long haul. Traders look for the situation of the market when there is a high probability of succeeding.
In fact, trends are among the most popular among traders because you rely less on luck and guess but instead look for a certain pattern before embarking into your trade. When you look at a certain investment in a chart form, you can see the trajectory and pattern.
On another note, what you do really is to first identify the trend and then adopt the oldest trick in the book which is to ‘buy low and then sell high’. What you really intend to do here is to catch a trend that works for you and then ride on it.