2011-Nov-29 - A short term Forex strategy
If you are new to Forex trading and have been reading about how to start trading successfully, you may have read that you should come up with a trading strategy that works for you. It is of vital importance that you pay attention to this advice, because it can be the reason why you succeed or fail when it comes to Forex trading. Having no strategy at all is very foolish. You will have no mechanism to stop hemorrhaging money if the market value starts to decrease, and you may end up buying and selling at the wrong times of the day, too late or too early. Equally, having a strategy in place that is far too complicated will result in poor management of transactions and mistakes. The most successful trading strategies for the Forex trader are often the most simple. This article will explore a simple but effective short term plan which is easy to put in place, and is suitable for the new Forex trader. If you have a few hours to spare during the day, and can access the Forex broker regularly, then a short-term plan, over a few hours a day can be very profitable and virtually risk-free. The simplest way to do this is to choose a currency pair, and observe the trend that is happening for that day. When two Exponential moving averages cross in that day is the right time to initiate the trade. If you wait for a slight pull back, or fall in the value of the currency, indicating that it has reached the turning point, then this is the time to buy. An exit strategy should be in place. Ideally, you could close 50% of the investment and sell early whilst the value is still rising. This protects 50% of the investment profits. The remainder should be left for as long as you dare to allow it to run to the most profit. It can take some practice, so you should make the most of the free demo accounts offered by Forex brokers in order to perfect your technique. This is really only a strategy that works for those who have the time to spare. When this plan is not in operation, there is no other profit being made, so if you really want to maximize on your investment, you should also have another longer term strategy in place for other trades whilst this short term plan is not being deployed.
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