Foreign exchange market otherwise known as Forex (FX) offers one of the best opportunities to gain a lot of money real fast. As a matter of fact, trillions of dollars worth of currency trades are exchanged on daily basis. Trading currencies can be quite profitable and that’s why so many people are interested in it.
However, trading in currencies isn’t as simple as it sounds. Forex is the most liquid market out there and it demands good strategies before you can take advantage of it. Here are a few of the best forex trading strategies that may help you out.
The Bladerunner Trade
This is one of the best trading strategies for the Forex market. It’s a good EMA (Exponential Moving Average) crossover strategy that uses price action to locate entries. This strategy can be used on any currency pairs and it’s suitable for trade during all timeframes. The name originated because 20-period EMA cut’s prices in half just like a blade.
If the price goes above the EMA and then retests it, then chances are that the market will continue to grow. However, if the price goes below the EMA and retests it, there’s a good chance that the market will continue to decline. This strategy focuses on picking breakouts from continuations in order to trade the retests.
The Daily Fibonacci Pivot Strategy
Trade entries, when talking about the Daily Fibonacci Pivot Strategy, are obtained by relying on standard Fibonacci retracements in conjunction with the daily pivot levels. Fibonacci retracements depict areas of support or resistance by using the horizontal lines to represent the movement of an asset in price when it continues moving in its original direction. Moreover, these movements are calculated by tracing a trendline between two extreme points (the highest and the lowest) and then dividing their vertical distance with the key Fibonacci ratios, which are: 23.6%, 38.2%, 50%, 61.8% and 100%.
Fibonacci Pivot Trades join together Fibonacci retracements and extensions with daily, weekly, monthly and even yearly pivots. Here, the emphasis is on using these combinations with daily pivots only. However, this idea can be easily extended to longer timeframes, including any combination of pivots. If you’re operating on Sydney market and have trouble understanding this strategy, you can consult with brokers who specialize in Forex trading in Australia and can give you valuable advice.
The London Hammer Trade
The London Hammer trade is basically just a different name for the London market. The period just after the market opening is believed to bring the best opportunities for traders. As expected, the London market determines in which directions the market will be moving. The opportunities that present themselves on the London market opening are perceived as very “once-in-a-lifetime” thanks to the extra volatility of the market at that point.
The London Hammer Trade is a great way to try and capitalize on these opportunities. During the London session, the London Hammer trades are especially effective as they can be used at any time when chances are that prices will be spiking strongly in one direction, and possibly reversing from the point of support or resistance in the same manner.
Bolly Band Bounce Trade
In a range-bound market, the Bolly Band Bounce Trade is a perfect type of trade and many traders choose to go with it, in combination with confirming signals. The Bolly Band Bounce focuses on the pre-observed behavior of prices where the Bollinger bands form a sort of a limit for the short-term price movement. So, in this respect, one may understand the ingenuity of the Bollinger bands’ name, as they (almost literally) share the elasticity characteristics of rubber bands.
Simply put, the price will come close to the outer band, and once it encounters resistance, it will snap back to the opposite band. Therefore, trading the bounces at the outer bands is probably the best way to use this behavior to your advantage. This, however, is not particularly effective in a trending market, but if the market is in a range it can be very effective for short-term scalps.
Forex trading can become a very lucrative hobby. However, Forex market is quite complex and you’ll require patience, knowledge and determination to become a successful trader.
Dan Radak is a marketing professional with eleven years of experience. He is a coauthor on several websites and regular contributor to BizzMark Blog. Currently, he is working with a number of companies in the field of digital marketing, closely collaborating with a couple of e-commerce companies.