Strategies for Trading Currency

It is best to have a strategy when trading currencies. To simply jump in is foolish. So as a guide, here are a few that are time tested and known to be profitable. Much like trading stocks, the idea with all strategies here is to buy low and sell high.

The Martingale Strategy:

This is a high risk one and is not for the faint hearted. The strategy is to purchase a double lot after each losing trade. Sounds counterproductive but actually is not. Setup is to take several different indicators and let them auto select the open/close positions. This gives you a high probability of winning trades. When you double a lot after a losing trade, you can then position yourself for a profit on that specific currency pairing. Be warned that this strategy could lose you a significant portion of your account.

The Trending Strategy:

Take your indicators and follow the trends in real time. Most indicators and forecast tools will show you the movement over a selected period of time, i.e...a month, a week, a day, an hour or even as it happens live. Select your currency pairing, study the PIPs and make your purchase. Now watch your pairings indications and sell accordingly. Basically, you should buy at or on the downtrend, then sell at the apex of the uptrend.

The Reversal Strategy:

This is where a buyer will identify the reversal of a specific trend, then open orders with that trend. You can use technical analysis or analyze the patterns of that currency pairing to find and confirm the point of reversal. Once identified and confirmed, your position can be transacted profitably.

Time of Day Strategy:

A lot of Forex traders actually only trade or become active at certain times of the day. Since this activity affects the pairings activity and swings the analysis tools, you can form a nice strategy this way. After you have identified a time of day that is active for a currency pair, it is possible to set up buy/sell positions with associated stop losses built in.