Successful Forex Trading Strategies Used By Sophisticated Traders | The Communication Blog

Wednesday, October 28, 2009

Successful Forex Trading Strategies Used By Sophisticated Traders

By Parrish Knight

There are many trading models or strategies. If you are looking to become a serious currency investor, you should take the time to learn how each is used. Each strategy is often used under different sets of circumstances and there is no strategy that works all of the time. Why? The answer is simple. Each trader often trades under a different goals and rules thereby producing a different set of results.

Successful traders will often tell you that the secret to their success is in intuitively learning when to pull out of a trade and when to stay in. The strategies they use make them more confident in making critical decisionsespecially when the markets are fluctuating. You have to understand how to profitable calculate the market to maximize your gains and minimize your loses. This all come with experience.

Trading based on emotions is never advised. Too many beginners get emotional when they see the market fluctuating and make emotional based decisions that cause them to lose money. Others lose by following the wrong advice. You have to learn how the market signals work and use them to your advantage.

Since you are looking for profitable trading scenarios or strategies, you will be happy to know there are only two main categories. The first category can be classified as a profit-maximizing strategy while the other deals with minimizing risk. No two investors will ever use these strategies the same because each may be influenced under a different set of circumstances.

To be a successful trader, you must take many factors into account. The size of the account, your initial investment, geographic influences, the trading platform you are using, and the trading system all play a significant role in determining how successful you will be. Some traders are in the game with long term goals while others are looking for short term profits.

Most traders use a system of leverage as their means of maximizing profits. This way they are able to trade with more money than what their account is funded with. This type of trading is usually provided by forex brokers are only available if you are a client. This can be a profitable way to trade because the funding is usually leveraged at 100:1 meaning that for every dollar put into an account, the trader can borrow $100 from the broker.

If you are driven by preventing lose, then you may want to learn about the stop loss strategy. The basic premise of using stop loss is to automate your trade by establishing set-points based on the exchange rate of how the market is performing. Once a trade has reached your stop loss preset, the trading activity will cease in your account.

Automated order entry trading strategies allow a trader to enter a trade opportunity at a preset price. This trading strategy relies on software automation whereby the trader is given control over the set price of the currency. The presets are designed with complex algorithms that enable a trader to enter a trade at the most favorable time for profits.

Other strategies may include strategies for choosing entrance and exit prices, currency pairs, and trading hours.

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