Login

Forex Strategies

TOP FOREX STRATEGIES TO MAXIMISE YOUR TRADING RESULTS

From social trading skills to which forex platform to join, the internet is full of tips and tricks on how to maximize your potential returns. Some of it falls flat, of course, while other tips are a great way to get good results.

Is the MetaTrader the best platform? Should you register for forex trading signals? It can be overwhelming. How do you sort the wheat from the chaff? How do you make sure you’re getting good solid advice to build your forex trading skills?

CMTrading is here to help you with our handy starter’s guide to Forex strategies.

What is Forex trading?

Sometimes it’s difficult to even figure out what you do with Forex, let alone the best ways to do it if you make the mistake of venturing too far into the murky google waters. Forex is the shortened term for the Foreign Exchange marketplace- i.e., where currency trades are done. It’s a massive market that affects almost everything we do that crosses borders somewhere down the line, from manufacturing and selling toilet paper to investment accounts.

It’s an incredibly liquid market, and so large it dwarfs even the stock exchange. It doesn’t have a closure period like the stock market does- there’s always someone, somewhere in the world looking for currency exchanges, so it’s active at any time of the day or night. By now, it’s probably becoming very obvious why it’s such an appealing market to investors. While there’s a whole host of different Forex markets and Forex platforms you can join, we’re sure you’ve done a little research already (or are planning to) so let’s move on to the most important part- Forex trading strategies.

Trading Forex Pairs 

There are multiple financial instruments available in the market and online forex brokers are very competitive in continuously updating and expanding their offering. Signing up for an account at a brokerage will give you access to currencies, spot metals, commodities, indices, stocks and even cryptocurrencies.  

However, currency pairs make up most of the trading volume across the market and especially the ones which are paired with the USD which we call the Majors. The reason why the USD is so popular is because of how strong the US economy is, its superiority in terms of political and military power and the fact that the USD is the world’s reserve currency.  

If you, as a forex trader, are looking to speculate on the EUR/USD for example – and you believe the EUR currency will rise against the USD, you obviously should be buying EUR and selling USD. So, you open a long position by buying the EUR/USD pair at the currently available ASK price. If your speculation pays off and the value of the Euro rises against the US Dollar, you will stand to profit according to how many Pips the price of the Euro went up. Since currency pairs are quoted in rates with usually up to 4 decimal points, it’s easier to measure any changes in price starting at the 4th decimal which has been coined the Pip or percentage in point.  

Recalling our previous example where we bought the EUR/USD, let’s consider that the ASK price was at 1.4796 at the time we opened the position. If the value of the EUR indeed went up to 1.4854, you would have made 58 Pips in profit (1.4854 – 1.4796 = 58).  

Following this simple example across the various other financial instruments and it becomes obvious why online trading is so popular. Indeed, there are many opportunities presented in the forex trading markets, but in order to be able to take advantage of these opportunities, you first need to find a reliable forex broker. This is of utmost importance to all traders. It’s the most crucial step for every forex trader to find a regulated forex broker because it’s the only way to safeguard your funds from any malicious activity. 

How do I improve my STRATEGY?

At CMTrading, we’re always keen to help investors boost their returns. Having a well thought out strategy to your trading approach is the best way to ensure you see the sort of returns you are interested in. Here are a few steps to do so:

  • Always have a plan– Poorly thought through investment is the number one reason why people lose their money. Know a few fundamental cornerstones of your trading strategy before you run out and invest. What currency pairs are you most interested in? How long are you planning to hold on average? What basic targets are you going to set? Of course, you need to be flexible- but good strategizing starts with a good plan. Decide which platform you want to use now too. MetaTrader is the globally dominant option, but there are a few more you can check out.
  • Know your market– Getting some basic Forex knowledge under your belt is critical before you do anything else. Once you start trading, keep a record of what you do- this ability to analyze trends will help stop you making bad mistakes a second time. Now, decide if you want to take a technical (chart-based) analysis method or opt for fundamental (raw data) analysis. They both have pros and cons, though laypeople generally prefer technical as it’s ‘easier’ to manage. However, we strongly suggest social trading strategies like using Forex signalling. Not only does this make it much easier to follow and understand, it also simplifies and takes the stress out of Forex trades.
  • Manage your risk– There is a host of tools on and Forex platform you use, to help you minimise loss. Stop/Loss and limit orders will do wonders to keep any disasters mitigated. You need to learn to be a disciplined trader, stick to the plan and avoid making emotional decisions. Don’t overtrade, don’t get emotional about trades and be smart with your limits.
  • Expand knowledge– Use webinars, seminars, books and resources to your advantage. MetaTrader offers some good resources to start off with.
  • Be Patient– React in haste, regret at leisure. Keep control of your emotions, and don’t let the waiting game psyche you out. You’re a trader and not a gambler.

Open your account to start trading the financial markets today!

START TRADING
We currently do not accept customers from your region