Most Followed Forex Trading Strategies

In order to profit from the forex market, every forex trader must follow some forex trading strategies which are designed according to their personal needs.

A good forex trading strategy makes online forex trading a confident work with strict discipline, sophisticated trading softwares and good market data.

In a market causing more than 80 percent of novice traders to lose money, forex trading certainly favors only the most evolved traders.

There is not single consistently profitableforex trading strategy .

A trader must look at his or her individual, family and financial aspects before adapting to a trading strategy.

The different aspects include his or her financial background, risk tolerance, trading ability, type of trading account, size of the trading account, currency pairs trading, geographical location, internet connection speed, initial investment, the affiliated trading broker, the trading software chosen, the profit goals etc.

In generally all popular online forex trading strategies can be grouped into two broad categories as profit increasing strategies and risk reducing strategies.

The most followed of the profit increasing strategies is the leverage.

Leverage is the amount burrowed from the broker to increase a trader’s buying potential. Leverages allow traders to trade in much higher volume than his account minimum.

The usual leverage rate is 100:1, where every $1 in a trading account can be multiplied to 100 by taking leverage.

Trading using leverage is known as marginal trading, which is mostly followed by day forex trader to trade large volume of currencies with very low profit.

The rate of leverage differs with brokers and account features.

Trading on margin can also cause huge loses if the price of the instruments falls.

The most followed of the risk reducing strategies is the stop loss order.

These are trading orders which has a predetermined price to stop the trading to reduce the loss. Forex traders can set the stop loss price for all his trading currencies.

If the price falls and reaches the stop loss price, then the broker sells the currencies immediately.

There is also proportional order entry practice in which the stop loss price is always changing with the increasing or decreasing of the currency exchange rate; enabling the trader to profit maximum when the market is good.

Automated order entry is one another popular onlineforex trading strategy, in which the trader set a specific price in his system to start trading.

On reaching the preset price the system automatically initiate the trade.

Another forex risk minimizing strategies include using of forex options and futures.

Forex options give the trader the option to buy or sell forex currencies at predetermined price at a point of time in future.

Futures provide the obligation to buy or sell forex currencies at a point of time in future.