Advanced Forex Trading - Several Common Trading Strategies

existforeign exchange marketProfit depends on three magic weapons - technical analysis, trading strategy, and money management. Technical analysis is what beginner investors are seeking hard, hoping to improve profitability by means of technical analysis capabilities; in technical traders through continuous study of technology, it is found that there is a bottleneck in the improvement of technology, and the use of trading strategies that assist technical analysis enriches trading methods, and reasonable trading strategies enhance traders' profitability; capital management runs through the entire trading process, including not only the control of the order volume in the transaction, but also the control of the overall risk of the account. This article introduces several commonly used trading strategies to expand traders' thinking.

First, hedging single trading strategies in volatile markets: "Hedge orders" using the same currency are called "direct hedging". Its purpose is not to "lock orders", but to open positions "one buy" and "one sell" at the same time when the market has been in a narrow consolidation, and set take profit and stop loss. The disadvantage is that the position of stop loss and take profit is not easy to grasp, and both ends may be stopped.

Second, the connected trading strategy: This strategy is also called "neutral hedging", for example using EUR/USD-USD/CHF, GBP/USD-USD/CHF, AUD/USD-NZD/USD, etc. Use the linked approach of the currency to "neutral hedge", but in order to reduce the risk, it will open positions with asymmetric positions and use the overnight interest difference of the currency to earn the spread. For example, EURUSD = 1.06 and USDCHF = 1.00, you can open EURUSD to buy for 1.0 lots and USDCHF to buy for 1.06 lots to offset the risk. But the disadvantage is that when the two currencies diverge, the loss of foreign exchange fluctuations will be much higher than the interest income.

III. Carry trading strategy: This strategy is relatively simple, and what to watch out for is the sudden and sharp reversal of the market. According to historical statistics, we have found that the currency of the carry trade can easily reverse rapidly after a large wave of rise or fall, so that the investors who execute the carry trade are driven out of the market before they can make a profit. At present, the currencies that are more suitable for this strategy are AUD/USD and AUD/JPY for buying orders, and EUR/AUD for selling orders.

IV. Martingale and Anti-Martingale Trading Strategies: Martingale's theory is to double the deposit if you lose, while the anti-Martingale is to double the deposit if you win and reduce the deposit if you lose. The Martingale strategy is actually a strategy of making profits based on probability. This strategy is not only used in the foreign exchange market, but also widely used in many other financial trading markets. If there is no perfect fund management protection mechanism, the losses caused by using this strategy to go deeper and more open positions will be very large and fast, and it is very easy to wipe out the profits earned when encountering a big loss. But the anti-Martingale strategy is just the opposite. It is to make money after making up the ante, and lose money will be reduced. Therefore, when the market is trending, the implementation of the anti-Martingale strategy can achieve very amazing profits.

V. Ultra-short-term strategyThe analysis period is mainly on the 5-minute chart, and the profit target is generally 10-40 points. The stop loss is generally half of the profit. The key reference is M10 and M60 in the moving average chart. Foreign exchange can be traded daily in Asia, Europe and the United States, and most of the transactions are concentrated in the European and American markets. The advantage is that it is more flexible and does not require long-term patience and waiting. The difficulty is that it must be timely to stop losses. The disadvantage is that frequent trading fees are relatively high.

Intraday short-term strategyThe analysis cycle is combined with 5-minute and 30-minute charts. The foreign exchange profit skill is generally set at 30-80 points, and the stop loss is also half of the take profit. Its trading is mainly concentrated in the European and American trading between 16:00-24:00 in the afternoon Beijing time. The recommended currency pairs are Europe, America, British pound, Australia and the United States, and the unrecommended currency pairs are cross trading and the United States and Japan.

Seven, swing trading strategy: The holding period is medium and long, and the daytime is the main one. The profit target is generally between 80-400 points. One side requires a large amount. At the same time, you can consider operating gold in precious metals. The selected technical chart is generally a 4-hour chart or a daily chart, and the entry point refers to the 30-minute chart. In addition to the moving average, resistance support decomposition is required. The advantage is that it saves time and effort, and it can obtain band profits in an easy situation. The disadvantage is that it requires larger funds to maintain a lighter position. Its stop loss is 1/3 -1/5 of the profit target.