Sophia1212 (1)

1
Best Forex Trading Strategy 2021 Seeking Right
Balance Between Risk And Profit
trendingbrokers.com/forex-trading-strategy
Forex Trading Strategy is used for making a
considerable profit even from the worst trading
situations. They help you manage the balance
between risk and profit and help you manage
hurdles that come on your path while doing
trading. A forex market is a place where
investors trade worldwide currency in pairs to
make a profit. Some people think a forex market
is risky due to its decentralization, but it is
not entirely true. These currencies trading in
the forex market are centralized in different
nations, which makes this market safe. Here you
only need to manage risks of losing money that
take place due to the use of high leverage. Here
we are discussing some forex trading strategies
which help you to manage risks properly during
live trading. But before that, if you are a
beginner, you need to understand how forex
trading works and how to use Forex trading
strategy in the proper manner. What is Forex
trading? Forex or foreign currency exchange is a
place where investors b uy and sell
currencies among each other at an agreed price.
It is the median through which companies, individu
als and central banks convert specifically to
another currency. The best example
2
of the forex exchange is While travelling abroad
and you spend money there, then it is said you
have done a forex transaction. FX trading
strategy helps traders to make proper moves for
earning returns. When multiple foreign exchanges
are made for a specific purpose, the huge
majority of currency conversion takes place with
the target of generating good returns due to the
huge number of currencies converted every day,
which create price fluctuation of some currencies
highly volatile. The volatility is the factor
that makes the forex market extremely attractive
for traders. Due to this factor, various
opportunities will rise in the market for
traders to earn high profits, but it may also
enhance risk factors. Forex trading strategy
Explained. An FX trading strategy refers to the
system that forex investors use to calculate the
right time to buy and sell a currency pair.
There are multiple forex trading strategies
available in the market that traders use for f
undamental analysis and technical analysis. An
excellent trading strategy will help traders to
analyze the market thoroughly and
build confidence in traders to execute trades
with protective risk management
techniques. Forex trading strategies
Overview Forex trading strategies are split into
a clearly organized structure that helps traders
in placing the most suitable strategy. The Venn
diagram given below will help you to understand
how each strategy appears in the entire structure
and the relation between various forex trading
strategies.
How to pick the best forex trading strategy for
balancing risk profit?
3
Before understanding how forex strategies work,
we need to understand the criteria for pricking
the best FX trading strategies. Here we explain
three major factors that you need to keep in
mind while selecting suitable FX strategies for
your trade. Time Frames Selection of the time
frame according to your trading method is
essential. For investors, there is a wide
difference between trading on a weekly chart and
a 15 minutes chart. However, suppose you are
seeking more about the process of becoming a
scalper, investors that target to earn profit
from fewer market fluctuation. Then you need to
pay attention to the lower time frames, such as
from 1 minutes charts to 15 minutes
charts. Alternatively, Swing traders gave
preference to the 4-hour charts along with the
daily chart for searching efficient reading
opportunities. Therefore, before picking your
suitable forex trading strategy, you must ask
yourself how long you want to stay in a
trade? Various FX trading strategies are
available as per time frames ( short, medium, and
long term). Only you need to make sure you
select smartly. Multiple Trading
opportunities While picking your trading
strategy, you need to ask yourself, how often
do I want to enter a market? If you are going
to open a more position, then a scalping trading
strategy is the best choice for
you. Alternatively, suppose you are looking to
spend more time and traders who trade on the
basis of analysis. In that case, macroeconomic
reports and fundamental factors need not spend
more time in front of charts. However, they need
to pick their FX trading strategy based on
bigger positions and higher time
frames. Positions Size A proper calculator of
trade size is an essential thing. An excellent
forex trading strategy needs you to understand
your risk sentiments. Bearing risks more than you
can handle will become problematic for you, and
sometimes it leads you towards exterminating losse
s. Good traders always set a risk limit for their
every trade. For example, traders need to set a
1 limit on their trade which means they will not
take risks of more than 1 of funds available in
their account on a particular trade. Top Forex
Trading Strategy for Creating a balance between
Profit Risk Forex trading needs to keep
various factors together for developing an
efficient Forex trading strategy that suits your
trading style. There are multiple strategies
available in the market but the number doesnt
matter you need to make yourself comfortable and
understand how those strategies work is an
important thing. All traders consist of
4

• different targets and resources, which you need
  to consider while picking a suitable Forex
  trading strategy. Some leading brokers who
  provide online forex trading are
• R Oinvesting.
• Here we classified traders into three different
  categories based on their requirements which we
  use to compare multiple FX strategies.
• Time resources required
• Specific distance to the target
• Frequency of trading opportunities
• We present a Venn diagram (bubble chart) to
  compare forex strategies based on these three
  categories. The horizontal line represents time
  investment, which shows how much time needs to
  be spent for properly monitoring the trade. And
  the vertical line
• consists of the Risk-Reward Ratio, which shows
  the number of risks each Forex trading strategy
  consists of and has the capacity to generate
  remarkable profit. Position trading strategy
  consists of the highest risk-reward ratio, and
  Scalping trading strategy requires more time for
  execution.

Range Trading Strategy Range strategy is a forex
trading strategy used to identify resistance and
support points through which investors can place
trades all over these key levels. This Forex
trading strategy performs efficiently in the
market without the presence of crucial volatility
and does not perform according to trend. The
major tool which is used along with this trading
strategy is Technical analysis. Length of trade
5
There is no specific range set for trade because
length restricts strategies able to do work at
any time frame. Handling risks is an essential
requirement of the strategy because breakout can
take place anytime. Therefore, a range trade
should be close at any current range-bound
positions. Exit / Entry points Oscillators are
one of the most popular timing tools. Some other
good performing timing tools are Commodity
Channel Index (CCI), Relative Strength Index
(RSI), and Stochastics. Sometimes we use price
action for conjunction along with oscillators for
the other predicted range-bound breakouts and
signals. To understand this thing properly, take
an example of USD/JPY Range Trading.
USD/JPY has shown a highly extended range-bound
costs level of the previous years. The chart
available here shows a clear resistance and
support band that traders considered for entry
and exit points being marked by the red and blue
boxes. Blue shows overbought, and red indicates
oversold. Rang traders provide successful
risk-reward ratios as a result, although this
forex trading strategy often applies with the
long term investment on each trade. Check here
advantages and disadvantages to determine either
this strategy will work for you or
not. Advantages A considerable number of
trading opportunities Favourable risk-to-reward
ratio
6
Disadvantages Need lengthy period of time
investment Required strong knowledge of
technical analysis. Trend Trading Strategy Trend
trading is the most straightforward forex trading
strategy that experienced traders use. This
forex trading strategy tries to submit potential
returns by utilizing directional market
momentum. Length of Trade Trend trading
usually appears above the moderate to the
extended time horizon as trends automatically
fluctuate in size. Same as price action, various
time frame analyses should be applied in trend
trading. Exit/Entry points Entry points are
generally determined by the oscillators such as
Commodity Channel Index (CCI) and Relative
Strength Index (RSI), and exit points are
estimated on the basis of a positive risk ratio.
With the help of stop level distance, investors
can easily uniform the length, and traders can
also use this for extending distance for handling
a positive risk-reward ratio like supposing the
stop loss was kept at 30 pips away, the take
profit level will be placed at 30 pips and far
away from the entry point. Example of trend
trading Search for the trend
7
In the above-given example, EUR/USD displays an
upwards trend verified from higher low and
higher highs, and vice versa is valid for a
downwards trend. Trading the Trend EUR/USD
While you observe a strong trend appearing in the
market, you must perform trade towards the trend
direction. For instance, the tough uptrend in
EUR/USD appearing in the above chart. Time
entries are determined by the CCI tools, must
observe how certain time CCI drop down? In the
chart above, CCI dips are shown by the blue area,
which is 100, and prices react with improvement.
But must note that not all trade provides results
in this manner due to trade should be followed.
Because each dip attracts more buyers towards the
market, and the price will go up. Now we
understand from this identifying a strong trend
is necessary for a successful forex trading
strategy. Check here advantages and
disadvantages to determine whether it is suitable
for your trading style or not. Advantages Signi
ficant reading opportunities Beneficial
risk-to-reward ratio Disadvantages A lengthy
period of time investment required Technical
analysis awareness required D ay Trading Strategy
8
This forex trading strategy is used for trading
assets within the same day which means all
trades will perform the same day before market
close. It does not matter whether you perform a
single trade or multiple trades throughout a
day. Length of trade Trade took place for a
short time interval, such as for minutes or an
hour. Trade should be considered day trading
when a trade opens and closes within a single
day. Exit/Entry points Entry position should
be determined on the basis of price break will
appear in the direction of the trend, and exit
point should be calculated based on 11
risk-reward ratio. Check here the advantages and
disadvantages of using this forex trading
strategy. Advantages A good number of trading
moments Moderate risk-to-reward
ratio Disadvantages Need extended interval of
time investment Technical Analysis knowledge is
essential. Example of Day trading EUR/USD
The above chart consists of an illustration of
day trading layout through MA (moving average)
for determining the trend which is represent
extended in the graph because the price is above
the moving average line. A line is represented by
the black and red line,
9
whereas the entry point is shown by the blue line
along with the stop levels kept at the past
price break. The stop distance level helps
traders to determine the profit level toward the
trend direction. Scalping Forex Trading
Strategy Scalping is very popular in forex
trading because through this strategy, traders
can easily make small profits on a frequent
basis. This happens due to multiple opening and
closing of positions that will take place within
the entire day. Traders can do this on their own
or with the help of a robot that works based on
the predefined instruction for taking entry and
exit positions. Using this strategy often picks
currency pairs that consist of highly liquid and
because spreads are usually tighter for these
pairs. Length of trade Scalping strategy trade
should take place in a short time period. Traders
using this forex trading strategy give
preference to the 1 minutes to 30 minutes
charts. Exit/Entry Point Same as the other
Forex trading strategy, it also uses MA to
determine the trend. The key level of the trend
over extended time intervals provides traders
with a huge picture Support and resistance are
created by these levels. Scalping, which takes
place in this band, researches a smaller time
frame by using RSI. Stops are kept at a few pips
far for ignoring huge movements against the
trade. Traders can also use MACD indicators for
determining the entry and exit points. Advantages
Disadvantages of Scalping Trading
strategy Advantages Provide a huge number of
trading opportunities for various forex
pairs Disadvantages A required extended period
of time investment Technical analysis knowledge
required Fewer risk to reward ratio Conclusion F
orex trading strategy helps you to perform your
trade successfully. Here we explain some forex
trading strategies in detail which perform
efficiently in forex trading. These strategies
may also help you in balancing risks and profit.
Check here the fundamental details of forex
trading and FX trading strategies. For more
information, read the above article carefully.