Forex trading is currency trading on the foreign exchange markets. Forex trading requires developing Forex strategies to succeed. Currencies are bought and sold twenty-four hours a day all over the world. Foreign currencies are always traded in pairs. An example that most people are familiar with is the United States Dollar and the European Euro.
Small investors and multimillion dollar banks can compete equally in the Forex currency market. The trick for the small investor is to learn the tricks of the trade that bring you consistent profit.
One of the most important Forex strategies is timing. Having a good charting system that is current is a must for good timing. Making money in the foreign currency exchange market is all about timing and following the charts.
Timing is important because the Forex market is open twenty-four hours a day seven days a week. Watching the change in a currency pair's value over a few days or a few hours can create an opportunity to make money depending on what is happening in the market and in the news.
Tying your trades to current news events and political changes is also an important Forex strategy. An upheaval in Tibet or a flood in Shanghai can cause a tremendous swing in the relative value of China's Yuan to other currencies. Taking advantage of the currency changes that are caused by political events, weather, and wars are one of the most successful Forex strategies that has always worked.
Follow the charts is one of the most important money making Forex strategies. This point cannot be overstressed.
Trading systems based on moving averages that are timed at either 15 minute or one hour intervals is a good simple strategy. This method works well when the market is trending but has the disadvantage of not being predictive of future changes.
The RSI is a good indicator when used in combination with other indicators like the moving average. Look for periods when the RSI is a minimum. That is the time to buy. Sell when the RSI peaks (reaches a maximum) and starts to decline. Tracking the RSI requires a system that updates charts at least every ten minutes. The advantages are simplicity but the disadvantage is fewer opportunities.
Draw two lines on your chart. These lines are the points that you will buy at and sell at. Development of where to place the lines takes time and study but once that has been accomplished this simple method minimizes losses and keeps you from trading too often.
The are just a few simple Forex strategies that work consistently. Do not fall in love with just one or a few Forex strategies and do not try and use so many Forex strategies that you have no time to do anything but look at charts. The trick to successful foreign exchange trading is using a simple set of charts with a small set of currency pairs that consistently produces profit.
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