Forex Strategy

Forex Strategy

Despite what you might have heard or thought, there is not a one simple system that will easily give you large profits in currency trading. By implementing a systematic Forex trading plan you can increase the amount of winning trades while protecting yourself from your account being wiped out by loosing trades.

When you start getting into the FX trading strategies there are three basic time frames (systems) in which you can trade Forex. These foreign exchange trading plans are basically short, medium and long term trading approaches. All of these systems have their own advantages and disadvantages when it comes to putting it all to work to make money.

- Short Term Forex trading is called scalping as trading is very quick. Trading all the time in both long and short positions, trades sometimes only lasting seconds or minutes. This requires a lot more skill and experience than it looks like, it can also be very stressful.
- Medium term currency trading is about holding an open position from one day to one week. The major plus of the medium term trading is that money can be made without spending all day in front of the trading screen.
- Long term foreign exchange trading is more about investing as it can mean to hold an open position from weeks to months or even years if there is an opportunity to make money while protecting the investment capital.

The big mistake that the new traders often make is that they start as a short term trader but when the market goes against their trade they then decide to hold on and become a medium term trader or even long term investor. Most often the market will not turn before it is too late for under capitalized novice Forex trader and they will have to throw in a towel and get out with big losses. So whichever strategy you decide to follow – stick to it. Good Luck!