Different Types of Forex Trading Strategies

Different Types of Forex Trading Strategies

If you are a new trader, there are different types of forex trading strategies you can use to obtain great returns. However, when you are opting for a strategy, it is very important to ensure that it suits your and the type of trading pattern you follow. When you are selecting a strategy, it is very important to consider the total amount you are planning to invest. As forex is a very risky market, it is very important to have the right strategies and business plan with you when getting into this business domain.

Below listed are some of the best strategies that you can use for trading smartly in your Forex business:

SMA (Simple Moving Average):

SMA is considered as one of the top trading strategies, which can eventually award you high return if performed in the right way. This strategy will optimize you the risk with respect for your reward. 

Hedging:

This is a process, were traders will be able to reduce the risks by keeping a particular forex. Here the traders would sell their deals within a certain period to offset the risks of decreased prices. However, this strategy can be pretty expensive if put options are bought against your stocks.

Dogs of the Dow:

This strategy gained a lot of popularity in the Forex market during 90s. It basically involves buying the best stocks in Dow Industrial Average. Hence, this will be stocks with highest payment yield as well as lowest P/E ratios. 

Buying on Margin:

This is also one of the common and well known forex trading strategies. In this process, you will be able to buy the stocks using borrowed money. As the money is provided by the brokers, it is known as buying on margin. However, there are lots of risk factors included in this process. As you are borrowing the money and making the trade, if you do not obtain good results, you may have to end up paying the full amount with interest. Therefore, if you are using this strategy, it is very important to be a tactile as well as aggressive trader. You should also have the right strategies for limiting your risks. Although this forex trading strategy comes with many risks, they can give you really high returns.

Dollar Cost as well as Value Averaging:

This is strategy involves investing fixed dollar amounts on a regular basis. When you are doing this, during a drop in price, the investor will be able to receive more dividend yield. The value averaging is considered as an alternative to the dollar cost averaging. Therefore, opting for this strategy will help the investor to know the value they wish to invest.

When you are planning to become a forex trader, it is very important to have the knowledge and skills, which will help you to analyze different forex trading strategies. This will help you to profit from your business and helps you in grow it as a giant.