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Forex Trading Strategies

Strategies are defined as the course of actions to achieve objectives. If you are not developing strategies, you are going not to achieve your objectives and ultimately your goals. The forex market involves buying and selling various currencies and in doing so traders make a profit. But this is not as simple as it is looking at first. You have to plan, foresee and then set up action plans to achieve profits. It is not necessary that you always win the race; sometime you will be losing your money. But proper strategy formulation always works in your favor and reduces the probability of loss. Forex trading strategies could be based on rational, incremental and emergent.
Forex Trading Strategies:

There are various kinds of strategies that you can use to make a profit in the forex market. Some of them which are popular are as follows:

Price Action Strategies

Under this strategy, the current price of currencies plays an important role. Instead of making a forecast on historical prices, the latest price is used and compared to the historical price to get a new price which helps a lot in making forex strategies. It is used by traders where price volatility is very high. This strategy provides a very good opportunity to make huge profit because of price volatility. But as you know, the higher the risk, the higher the return you will enjoy.

Divergence Trading

Under this strategy, traders estimate the price of currencies using various factors such as RSI, MACD or Stochastic. Divergence strategy gives the signal of the weakening trend which the trader can use for exploring advantage. The best thing regarding this strategy is that you will enjoy profit by selling near the top and purchasing near the bottom. Divergence trading is categorized into Regular Divergence and Hidden Divergence. The price must be higher high or lower low than the previous high and previous low in order to implement this strategy.

Simple Moving Strategy 

This forex strategy method is the simplest one and is calculated by adding the closing price of each day and then divided by the number of periods. This is also called the arithmetic mean.

Pin Bar Strategy

Introduced by Marin Pring, it is based on a candlestick pattern (this pattern consists of the left eye, right eye, and the nose bars) and makes use of the price point at which the deal was rejected. A pin bar involves wick and tails (long or lower) and wick must be at least 3 times of the body. It is also called the Pinocchio bar.

False Break Strategy

Sometimes, it happens that there is a wrong perception of any currency positive movement. As a trader with the uniqueness and experience of the market movement, you can take advantage of this false break and can earn the smart money. All the time in the market this happens and arises due to the herd mentality of the people.

You can use any forex trading strategy to gain income in the forex market. Playing with a specific strategy is an art and requires plenty of experience and heart.