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:
Open your account to start trading the financial markets today!