Saturday, August 15, 2009

Top 4 Forex Trading Techniques

“The Top 4 Forex Trading Techniques…”

The Following are the various techniques a FOREX trader can use:

- Forex hedging techniques – hedging is a process wherein, one will open a trade in one pair and will open another trade with another pair that is closely correlated with the first pair.

Hedging normally involves derivatives and works in a complicated manner. This process will lessen the risk of losing but will not guarantee large profits.

- Forex scalping technique – this is a forex trading technique wherein one will enter and closes a position in a short period of time. For instance:

If someone is using a candlestick bar chart, scalping can be done in every candle, which is very risky especially to a newbie.

Another way of scalping is based on the time frame. If one is using the one-minute chart, he or she will enter a trade every minute, if a trader uses the three-minute chart a trade is entered every three minutes and so on.

- Forex risk management technique – this technique is perfect for those who are disciplined enough to follow their trading plan.

With this technique, a trader should set a stop loss and take profit, and should follow what is set. In this way, one have taken the profit already before the market reverse or has closed the position before it wipe out the trader’s margin.

- Forex overlay technique – trading with this technique can be good. However, overlays still need some other indicators in order to confirm the market’s direction.

This technique is very important to every trader, as overlays simply states a markets change in direction. Bollinger Bands, Parabolic Sar, and Pivot points are just some of the most common overlays used in forex trading.


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