Forex Trading: Strategies and Other key Factors to Success

Forex market becomes increasingly attractive for retail investors. Without a doubt, bankers have a lot more leverage in the Forex market. They have much more significant investment capacities and their objectives are often long-term, serving their private interests while maintaining a certain economic equilibrium in the capitalist world.

Yet independent traders represent a growing share of volumes traded in Forex. They weigh less and do not necessarily all point in the same direction. Their objectives are much more down-to-earth since retail investors aim for more immediate profits on small changes in trends.

Several different factors are affecting the success on the Forex market. Some of the most important are strategies, currency pairs you choose, and the broker you entrust your money to.

Forex strategies

Forex day trading

This method relies on opening a large number of positions per day (at least 10). The aim is to spread the risk as much as possible over several different orders. The other rule to follow in day trading is to close all positions before the end of the trading session to avoid paying swap fees and potential gaps when the markets reopen. A profitable day trader is an investor who obtains more than 50% of winning trades per trading session.

Scalping Forex trading

Scalping is often associated with day trading since this method aims to maximize profit from micro variations in the Forex market on short-term positions. The leverage effect greatly facilitates the collection of gains with scalping without increasing your investment.

Carry trade on Forex

This strategy involves borrowing or selling a currency at a low interest rate to use that sale to buy a currency with a higher interest rate. Profits are made with the positive difference in interest rates. It's an alternative to the classic buy low and sell high approach.

Trend trading on Forex

Trend trading is a long-term approach to Forex since this type of investment aims to follow the trend of a currency pair over the long term to maximize profits following major economic news. Unlike other Forex strategies that rely exclusively on technical analysis, trend trading relies on fundamental analysis.

What is the best currency pair for Forex trading?

We would tend to take a pretty clear opinion on the best currency pair to trade Forex. We advise beginners to focus on major currency pairs, as they are the most liquid and fluctuate less than other currencies.

There are obviously other equally lucrative opportunities. Cross-currency pairs are all pairs that do not integrate the US dollar but use at least one of the other three major currencies: EUR (euro), GBP (pound sterling), and JPY (Japanese yen). Depending on market conditions, cross currencies may be a lower-risk investment than a major. Ex: EUR/GBP; CHF/JPY; GBP/AUD.

Finally, so-called exotic currencies relate to all other currency pairs that are made up of a major currency and an emerging currency. The main drawback of these currency pairs is the cost of trading which can be very high since they are less liquid. Ex: EUR/TRY; USD/SEK (US dollars / Swedish kronor); USD/SGD (US dollars / Singapore dollars).

Choosing the trustworthy broker

As an individual trader, you ought to pay particular attention to the Forex broker you choose. There is no use in preparing a decent sum to invest, a good trading plan, and opting for a good strategy if you fall for a scammer. Make sure the company complies with the regulations and transparently show business details.

Also, train enough to learn the ropes. That's why you need to search for a platform offering a demo account. And last but not least, go from the broker that offers multiple assets trading. At some point, you will need to diversify your investment following the first risk management rule in trading.