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Main Logic

How many kinds of main strategies are there in Forex?

There may be dozens of strategies in Forex trading. Let's talk about the roots.

Nature Of Market:

Everything in the universe has a nature. This is the Forex market. So is every currencies pair in this market. For example, GBP / JPY always moves faster, and its range of wavelength is longer than other couples, as a hundred pips in a day or even an hour. EUR / GBP in general, waves narrowly several pips in a day. For American, EUR / USD and GBP / USD and to sleep in the day and dance at night. AUD / USD and NZD / USD look like twin generally act in the same style, if one goes north, another does not like to go south. But EUR / USD and USD / CHF are doomed to be enemy, while a of them fly like a hydrogen balloon, the counterpart on all fall like a lead ball. And so on, etc.

Once we find this kind of "Nature of the markets," we can develop and discover some of the strategies to particular currency pairs, just follow their nature, predict their direction motion and scope. Then we will contact our own trading strategy and system.

Trade fundamental rights:

In Forex market, many professional analysts like to use a type of method to predict the future. It's called "Fundamental Analysis." Based on this method, develop many types of strategies for forex trading. These are strategies of forecasting the future price movements of currencies based on economic factors political, environmental and other relevant data and statistics that will affect the basic supply and demand of any base of foreign currencies.

If you Fundamental Trade would like to try, you need to learn and understand a lot of knowledge of finance. In fact, not only finance knowledge, you must be interested many things of this world, including politics, economics, geography, culture, diplomacy, even military affairs. And you need to study the fundamental elements affect the underlying economics of a particular entity. For example, when U.S. GDP or the employment report is strong, you start to have a pretty good idea: general health of the U.S. economy is good. So the U.S. dollar must be stronger than other currencies. But how far can the dollar go U.S.? Trade fundamental rights can not answer this question with great precision. You may have to come up with other tools for precision with regard to best way to translate this information at points of entry and exit for a particular trading strategy.

Coverage:

In finance, coverage is an investment that is taken out specifically to reduce the risk in another investment. Hedging is a strategy designed to minimize exposure to an unwanted business risk, while allowing the business to benefit from an investment activity.

In FOREX, there are two similar types of "coverage" strategies:

A, buy and sell the same currency pair, same lots, same time. Then let it go. While one of those orders goes north the counterparty is going south. After the winner takes profit, we can expect the loser to turn around. In a yo-yo market, this method works well.

For example, buy 2 lots GBP / USD at 2.0003, at the same time sell 2 lots GBP / USD at 1.9997. While the rate rises to 2.0053, close to buy and take profits 50 pips. Now, the sell order is based on about 50 pips. Let's wait for the change to low down, it will usually fall, especially in yo-yo environment market. If the rate falls to 2.0037, close to the sales order, sales order will lose 40 points. Does it hurt? No. Do not forget the 50 pips we have taken in order purchase. In total, we get 50-40 = 10 pips. Moreover, if the rate continues to fall, say down to 2.0027, we can take 50-30 = 20 pips, etc.

Some people doubt it ... not this "strategy" sound like nothing flat coverage, paying only double page? Why bother? Well, they are right because we forget to mention the key point: the timing of closing orders. When to close in order to win to establish a foundation and the time of closing to lose blockade of the benefits, there are some tricks inside. Experienced traders use technical analysis skills to decide this vital time. Believe it or not, experienced traders say that this method helps them screening false signals.

This type of "Yo-Yo Hedge" can work on any pair currency.

2, buy (or sell) unequal lots of special coins and buy pairs unequal amounts of other currencies pairs which usually move in the direction opposite. This seems a "Semi-Hedge" trading strategy. It is created based on "correlation" between some particular currencies pairs. So is not suitable for every currency pair.

In fact, this type of coverage has another feature: earning SWAP! You earn interest every day on the charge addresses which can yield up to 50% annual full account balance.

There are several pairs can. As EUR / USD vs. USD / CHF, GBP / USD vs. USD / CHF, AUD / USD vs. NZD / USD, EUR / JPY vs. CHF / JPY, GBP / JPY vs. CHF / JPY.

Let's take the EUR / USD and CHF / USD pairs.

These pairs are negatively correlated historically 93-98% of the time. This is when a couple goes the other goes down, and vice versa, up to 98% of the time. In a high leverage account (of up to 400:1 or 500:1), you can earn 50% interest in a year SWAP. How? Say you have $ 5,000 in your account and establish a risk margin of 10%. If the Net interest we receive is 1.25% per annum, interest of 1.25% was increased to 50% annually for 400:1 leverage.

And, this return does not include buy low / sell high profits.

But if the basis of such high risk of collapse, meaning the "correlation" no longer exists, for example, the "correlation" falls below 50% or less will be disastrous.

Arbitration:

Some people call the "arbitration" as a risk-free strategy. But other people call it as a gimmick that looks like the cat scratching up the pieces. But in theory, the risk is minimal in facts. We introduce three types of arbitrage strategies here:

1, Triangle Arbitrage: Searching for two pairs fast motion (like the EUR / USD and USD / JPY), the price of a not-so-fast moving pair like EURJPY should always be obtained by multiplying (or dividing, etc) pairs that are moving fast. Thus, For example, if EUR / USD is 1.4871 and USD / JPY is 108.24, the price of logic EUR / JPY should be 1.2 x 120 = 160.96. But at the same time, the real euro / JPY is 160.90. The slower moving pair lags behind the logical price, then comes the opportunity for profit.

In practice currencies are quoted with a bid ask, so a trader should be careful that he is actually the purchase price in that sale, and sale in that price range. Other operating expenses such as commissions, you can also invalidate the apparent free lunch.

More couples:

AUD / CAD CAD / JPY AUD / JPY

AUD / CAD GBP / CAD GBP / AUD

AUD / CAD USD / CAD AUD / USD

AUD / CHF CHF / JPY AUD / JPY

AUD / CHF GBP / CHF GBP / AUD

AUD / CHF USD / CHF AUD / USD

AUD / JPY EUR / JPY EUR / AUD

AUD / JPY GBP / JPY GBP / AUD

AUD / JPY USD / JPY AUD / USD

AUD / USD GBP / USD GBP / AUD

AUD / USD USD / CAD AUD / CAD

AUD / USD USD / CHF AUD / CHF

AUD / USD USD / JPY AUD / JPY

CAD / JPY EUR / JPY EUR / CAD

CAD / JPY GBP / JPY GBP / CAD

CAD / JPY USD / JPY USD / CAD

CHF / JPY EUR / JPY EUR / CHF

CHF / JPY GBP / JPY GBP / CHF

EUR / AUD AUD / CHF EUR / CHF

EUR / AUD AUD / JPY EUR / JPY

EUR / AUD AUD / USD EUR / USD

EUR / AUD GBP / AUD EUR / GBP

EUR / CAD AUD / CAD EUR / AUD

EUR / CAD GBP / CAD EUR / CAD

EUR / CAD USD / CAD EUR / USD

EUR / CHF AUD / CHF EUR / AUD

EUR / CHF GBP / CHF EUR / GBP

EUR / CHF USD / CHF EUR / USD

EUR / GBP GBP / AUD EUR / AUD

EUR / GBP GBP / CAD EUR / CAD

EUR / GBP GBP / CHF EUR / CHF

EUR / GBP GBP / JPY EUR / JPY

EUR / GBP GBP / USD EUR / USD

EUR / JPY GBP / JPY EUR / GBP

EUR / JPY USD / JPY EUR / USD

EUR / GBP USD / EUR USD / GBP

EUR / USD USD / JPY EUR / JPY

GBP / JPY USD / JPY GBP / USD

2, arbitrage hedge:

This technique is the safest in history, and the most profitable of all hedging techniques, a minimal risk. This technique uses the arbitrage of roll over interest rates (SWAP) between two brokers.

A agent who pays or charges interest in rolling over the end of the day, and the other should not charge or pay this kind of roll over SWAP interest. The main idea of this type Arbitration coverage is to open a currency position (eg, Fore, the higher the SWAP GBP / JPY) in a corridor that will pay a high interest for every night takes the position, and to open a reverse of the position of the same coin with a broker that does not charge interest for carrying the trade. That way you will earn interest or exchange which is credited to your account, risk-free.

3, Red Arbitration:

The main idea behind the strategy is, the differences between rates of use of the cross (such as EUR / USD, GBP / USD and EUR / GBP) at different markets.

For example, suppose you had opened the following positions:

buy a lot of EUR / USD at 1.4867;

sell 1 lot EUR / GBP at 0.7600;

And sell 0.76 lot GBP / USD at 1.9586.

The compensation / Clearing gives the following results:

Long EUR from the first couple of euros and steps of the second pair gives zero exposure in EUR.

Long position in GBP from the second pair and short position in the third pair gives zero exposure in GBP.

Short position from the first pair ($ 148,670.00) in USD and long position of the third pair ($ 195,860.00 * 0.76) in USD gives you $ 183.60 profit without open positions and exposures.

Simple? In Not really for small traders, it can be for "big brothers" only. Because it is very difficult to play propagation is broken, stop hunt loss more or less in games against the runners.

Carry Trading:

Carry trade is a well-known trading strategy which an investor sells a certain currency with relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. So, this investor able to profit from the difference of these two types of interest.

JPY is currently considered the most popular currency to use as low-interest Performance currency currency trading, because their interest rate is the lowest in the world almost at 0. And GBP is currently considered the high-yielding currency. So are NZD and AUD.

When we buy these currencies pairs: GBP / JPY, AUD / JPY, GBP / CHF, USD / JPY, EUR or CHF;

Or trade: EUR / AUD, EUR / GBP, AUD / NZD;

Both actions can have positive results on the nominal interest rate SWAP. When combined with certain types of hedging, we can return to as high as 100% per year and keep the risk low.

The great risk in a carry trade the uncertainty of exchange rates. In addition, these transactions are generally performed with high leverage, so a small movement in exchange rates can result in huge losses unless adequately covered.

Martingale:

Originally, martingale referred to a class of betting strategies popular in 18th century France. In exchange transactions, the strategy of letting the dealer to double their lots after every loss, so that the first win would recover all previous losses plus win a benefit equal to the original investment. In the following example, you bought a lot of EUR / USD at 1.4650. Unfortunately, the rate drops. You play as a martingale, "double" buy two lots, you need the EUR / USD from 1.4630 to 1.4640 rally to break even. As the price moves lower and you add four lots, you only need to gathering rather than 1.4625 of 1.4640 to the point of balance. Lots more to add, the lower the entry price average. Even if you can lose 100 points in the first lot of EUR / USD if the price hits 1.4550, you only need the currency pair to 1.4569 rally to break even in full holdings. Once the rate goes up one more pip gain lot.

EUR / USD Lots Average Price or balance point

1.4650 1.4650 1

2 1.4630 1.4640

4 1.4625 1.4610

8 1.4605 1.4590

16 1.4588 1.4570

32 1.4569 1.4550

The Martingale strategy needs a very strict money management and you must understand that initially the money will come slowly, but if you lose your patience and raise the level of risk to both, can not be locked until the end to see the turn-around.

Anti-Martingale:

The strategy against the martingale is the opposite of the better known martingale approach. This approach increases the order after of many victories, and decrease after a loss. The use of an anti-martingale risk management system to increase profits during time periods trading approach is working well, while automatically decreasing exposure during phases of the cycle where trading is not profitable. This is believed to decrease the risk of ruin for trading.

Grid:

Basically, the operator establishes a series of limit entry orders X pips from the current price for example 15 pips. Some experienced operators to use the Fibonacci Series Numbers (0, 1, 1, 2, 3, 5, 8, 13, ...) or golden numbers to section of the grid. Once it hits the price level of the limit order is executed. Then every 15 pips there is another end in the price limit for implementation. And so on. In a yo-yo market, while the price moves up or down, provided that the limit orders executed. Once the order is profit taking, and movements prices to its original level again, a new limit order is executed again, then repeat the same process. Just open orders and take profits in a set of "grid". It's simple and easy, but difficult to treat when it is necessary to close all orders, especially the stop loss. Some experts say they do not need to "stop loss" but will find the opportunity to keep all their positions to "Margin?

Trading Item:

This refers to the practice of buying and selling currency pairs so that all positions will usually close on the same trading day Forex. The idea comes from day trading the stock market. Day traders rapidly buy and sell stocks throughout the day with the hope that their reservations will continue to increase or decrease in value of the seconds to minutes of their ownership shares, allowing them to secure quick profits. Day trading is extremely dangerous and may result in substantial financial losses in a very short period of time. Under the rules of the NYSE and NASD, customers who are deemed "pattern traders days "should be at least $ 25,000 in their accounts and can only operate in margin accounts.

But in the currency market, everyone can be an operator day to day trading. In fact, more daily transactions, they can do "extortion."

Speculation:

Speculation is a trading style where small differences created by the bid-ask price is exploited. Usually involves establishing and liquidating a position quickly, usually within minutes or even seconds. It means trying to get some points (1 ~ 3 points only, no greed, no long term) off the market at all times. This strategy is based on a fact: approximately 70-80% of the time, the market is in a consolidation pattern. What this means is that for most of time that the market is making significant progress. For example, after the U.S. market is closed and before the European market is open, the market currency tends to oscillate in a consolidation channel for hours at a time before making another significant step in one direction. This pattern of behavior in market is ideal for scalping in the currency. Each time you enter the market, waiting 10 or 20 minutes, once you have several pips gain then cash and go.

Speculation has some characteristics:

1, Low profile and lower risk. Scalpers are only exposed in a relatively short.

2, moves to smaller, more readily available. The normal wave of the market will give you several pips easily.

3, high-volume adding profits up. Since the profit per share or contract is very small due to their goal of spreading, it is necessary to general trade to add up the benefits. Speculation is not suitable for small businesses of capital.

But beware, not every broker welcomes this kind of leather scalp strategy. If too fast and scalp thin, say you just hit a pip every 2 or 3 minutes then run, and repeat again and again a day, every day, you must feel high, eh? But the agent can not be happy and bans you. You will be expelled because of your scalp with success!

Break out:

Using the indicator Bollinger Bands on a graph, we will find each Forex currency pair moves in a "band" or canal. By finding major support and resistance levels with technical analysis, operator of the break-out strategy is going to buy this pair on the lower level support (Bottom of the band or channel) and sell them near resistance (top of the band or channel). So far there is still a break.

Once the price exceeds the high-end line with higher than average volume, or the opposite: the price breaks the low-end line with higher than average volume, the opportunity is coming. The idea of this strategy is that when a currency pair breaks out of the channel usually experiences a large price movement in the direction of the breakout. Therefore, buying in price breaks the high-end line and continue to hold until the rate has risen a distance comparable to the height of the range. If it falls into place, stop losses as it penetrates the upper range line. Or, they sell at the price breaks the lower range line and continue to hold until the rate has fallen a distance comparable to the height of the range. If you instead, stop losses as it penetrates the lower range line.

Pivot:

Also Levels of support and resistance, many forex traders like to use another indicator to analyze and predict changes in currency pairs' price, is called: the point of rotation. To calculate and analyze pivot is a subset of technical analysis, this reference point, operators can locate the point of rotation of the trend and this is very useful in deciding when and where to buy or sell.

Classic Pivot Point, Support and Resistance formulas are as follows:

Sight any one figure, the pivot is half the previous bar high, and closing prices. In the formula, "H" represents the previous bar high, "L" is below the previous bar, and "C" represents the price of the previous bar closing.

Current Bar Pivot Point (P) = Previous Bar (H + + LC) / 3

First level of support and resistance can be calculated as follows:

First Resistance Level (R1) = (2 * P)-L

First level of support (S1) = (2 * P)-H

Similarly, the second level of support and resistance:

Second Resistance level (R2) = P + (R1-S1)

Second Level Support (S2) = P-(R1-S1)

Since many currency pairs tend to fluctuate between support and resistance levels, and these levels are calculated on the basis of the pivot points, so when a trend or break trader knows where the point rotation is, allow him or her to find out key levels that need to break to go to qualify as a breakout.

News Trade:

The system is developed based on economic news events from around the world. Almost half of those announcements have moved the market significantly. Before a big news to come, we can buy and sell some currency pairs at the same time, same lots, set stop loss prices for them. After news are released, especially for large on both sides of buying and selling the end jump significantly. No matter the order is a winner, just let it go. And the loser will come to the stop loss, only let it be. The winner's gain minus the loss of the loser, is the commercial benefit of the press. For example, payroll non-agricultural / Employment Report - The NFP is the most influential press release each month. It was announced on the first Friday of the month at 8:30 am ET in the previous month. We place a purchase order and a sell order at market prices for the GBP / USD, at 8:29 am EST. Do not forget, set 30 pips Stop Loss level for them. Wait two minutes, the news is announced, is great! It then jumps to sell more than 100 pips, and the purchase order drops like a brick. The brick reaches the stop loss and the pain is over. In total, the gain would be 100-30 = 70 pips. Quick and easy, cool enough?

Next trend:

It's so simple, just follow the trend. Shopping is the most difficult strategy because no one can say with 100% certainty what the trend is correct. Go to see a chat Weekly USD / CAD, if you had shorted this pair in September 2001 and remained until September 2007, you know what the trend.

The tool the most famous trend analysis seems the beginning of the wave. In the 1930s, Ralph Nelson Elliott discovered that stock market prices and reverse the recognizable patterns. Elliott isolated five patterns, or "wave" that recur in market prices.

Another trend analysis guru be WD Gann. In 1908, Gann discovered what he called the market factor "time", which became one of the pioneers of technical analysis. To test its new strategy, he opened an account with $ 300 and one at $ 150. It proved a great success: Gann was able to make $ 25,000 profit with his $ 300 account in only three months, meanwhile, earned $ 12,000 with benefits account for $ 150 in just 30 days! After the results were verified, became famous on Wall Street as a of the best forecasters of all time.

Back to chat of USD / CAD, now, please tell me, how to follow the trend? Will USD / CAD continue with the trend that goes south to 0.6000, or, another trend toward the north again in reverse order of 1.6000?

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