Basic Forex Trading Strategies

Super Profit Scalper

Forex trading strategies are amongst the more important aspects of your trade. In fact, they are considered to be the key to a successful online currency trading or FX trading. Now, having a good understanding of what these strategies are and how they are used would certainly give you and edge over the other investors.

As you may or may not already know, FX trading is actually very different from trading in stocks and as such, when it comes to significant short term profits, you would definitely need a good grasp of Forex trading strategies. Here are some of the most common ones to help you get started.

Leverage – This FX trading strategy was designed to enable online currency traders to get their hands of more funds than what they have deposited. In doing so, they are actually able to maximize the FX trading benefits that would have been unavailable to them without the additional funds. When you use this strategy, you would be able to use about 100 times the amount that’s in your account that should help you invest in higher yielding transactions this giving your better trading results.

Stop Loss Order – This is perhaps one of the most commonly used when it comes to the different Forex trading strategies because it actually helps investors when it comes to protecting their investment. This strategy would allow them to minimize any potential loss by creating a predetermined point at which he or she would no longer trade. This is extremely beneficial especially to those who tend to forget the limits that they have set for themselves.

All of these Forex trading strategies were designed to help the investor and protect their investment from possible loss. There would always be risks whenever you enter a transaction in the FX market thus it is important for an investor to familiarize themselves with these strategies.

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Buying on Fundamentals

SetForget Pattern Profit

A very successful investor was once asked “how do you make money in the stock market?” Buying on fundamentals. “Simple”, he said. “Buy low and sell high”.

1903 stock certificate of the Baltimore and Oh...
1903 stock certificate of the Baltimore and Ohio Railroad (Photo credit: Wikipedia)

Great advice, if only it were that simple. We all know that in order to make a profit you need to sell your stock at a higher price than you paid for it. But to do that, you have to pick the right stock and get the timing right.

This is where things get a little more difficult. How do you go about picking the right stock? And how do you know when is the right time to buy and when you should sell and close out your position?

One strategy that many successful investors follow is looking for stocks that are particularly undervalued or cheap, relative to the rest of the market. There could be a number of reasons why a company’s shares are cheap. The key thing is to find cheap stocks that are undervalued relative to what they should be be priced at.

If you can find a company with a strong balance sheet, with a good cash position, healthy revenues and decent profits, but with a share price that seems low, then you’ve probably found just such an undervalued stock, in which case it is probably worth investing in.

Ask yourself the question why is the stock priced low. If it’s for some inconsequential reason like a recent management change, a particularly strong competitor, the company not having the latest “hot product” or the sector itself being unfashionable for example, then you could be on to a winner. Whereas if the problems go deeper, such as heavy falls in revenues, profits turning to losses, significant debts, etc, then you are best to steer clear.

If you stick with the fundamentals and buy shares in healthy companies that just happen to be a little under priced right now, you will find that over time things will balance themselves out, the company’s price will get back in line with the market and your portfolio will benefit as a result.

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