Participating in the Forex trading industry is very easy, but hardly anybody can win the war that starts right after their entry. Many CFD traders lose the war either because of their weak strategy or they become too confused about the industry. Professionals are aware of this situation of the newbies, and that’s why they always advise the juniors to understand the strategy before adopting. We also suggest that as a beginner, you should only choose that strategy which fits you psychologically.
There are multiple strategies that the investors can follow, but before choosing that, let’s take a look at the most effective and powerful trading plans.
Four powerful Forex plans
1. Trend trading
Professionals opine that it is one of the easiest, simplest, and most reliable plans for the newbies. Here, you have to deal with the trend and observe its movement. To do this efficiently, everybody should learn the resistance and support level at first.
The trend of the Forex market depends on several factors, and one can use the technical indicators to analyze the flow of the currency. If he can realize the indicators accurately, the situation will become easier for him to handle. He will know the strength of the approaching graph as well. A trader can see two major types of trends in the market – bullish trend: when the price moves up and bearish trend: when the price falls.
To find out the ideal position to start or close a trade, one can use the indicators like moving average crossover, moving average convergence or divergence, momentum, and so on.
2. Position trading
In this kind of business strategy, an investor needs to retain his purchased financial instrument for a few days or weeks. In fact, one has to retain the currency for a long duration. It is also called a business with a higher timeframe. You don’t have to worry about the graph, and there is no need to keep looking at the screen as well.
These people generally utilize the trend-following plan and depend on analytical information. Thus, it becomes comfortable for them to identify a potential opportunity to enter a trade. However, the rate of success or failure entirely depends on the realization of the traders. They will only lose if they are unable to identify an opportunity. The newbies adopted this plan are advised to use the simple moving average indicator to simplify the entire business process.
3. Swing trading
It is another common and popular style, which is often advised by Forex experts. They suggest the beginners use this strategy since it is a potential plan and can help them to earn more within a short time. In addition to this, the newbies can learn to handle the technical indicators and know the way to conduct fundamental analysis.
Basically, in this trading plan, the trader has to retain the bought currency for a specific period, ranging from 15-minutes, a few hours, days, or weeks. This style is open and not like the position or day trading. The utilization of momentum in this style can be a great advantage.
It is the most robust business style in this list and provides so many opportunities to deal. But don’t jump for this strategy right now because there are several things that you must know about this. It can be a robust plan for the market, but it is considered the riskiest one as well. And a single wrong decision can destroy the entire investment. In addition to this, it is highly stressful, and the individual must keep looking at the graph in order to find a potential market. These are the four most powerful business plans for the CFD industry. You should study more about each of them to figure out which one suits you the best. Always try to gain more knowledge as it will make you a better trader.
Sources: home.saxo / investopedia.com