In fundamental analysis, a trader will look at fundamental economic indicators to understand whether a currency is overvalued or too high, and see which values tend to move relative to other currencies. On the contrary, technical analysis is used to detect possible trends in the currency. Traders will appreciate technical analysis because it provides an objective, visual and scientific basis for determining the right time to buy and sell currencies. That’s why smart traders use the buy sell trading indicators to secure profits and minimize risks more effectively.
To get a good analysis, of course, you need to balance it with the right strategy. Then, what are the strategies you need to know in forex trading?
1. Scalping
The scalping strategy is an intraday trading strategy that aims to take small profits as often as possible. This strategy produces a high trading frequency, even though the average profit per trading position is relatively small.
2. Day Trading
Day trading is the most popular trading strategy where it opens and closes trading positions in one session. Typically, day traders are well acquainted with taking advantage of a large amount of leverage and short-term trading strategies.
3. Swing Trading
This strategy is taking a trading position that lasts several days to several weeks to benefit from anticipated price movements.
4. Range of Trading
Range trading is a popular trading strategy based on the idea that prices can often stay within a predicted range over some time. This strategy works well in sideways markets. Traders rely on the ability to frequently buy and sell at predictable highs and lows of resistance and support.
5. Breakout Trading
In this trading, if the price breaks higher than the previously defined resistance level, traders can buy in the hope that the price will continue moving higher. Likewise, if the price breaks the support level downwards, the trader can sell to close the position at a lower price.
6. Momentum Trading
Momentum trading and momentum indicators assume that a strong price movement in a certain direction is an indication of the possibility that the price trend will continue in that direction. Momentum strategies often take price and volume into account and use graphical analysis such as oscillators and candlestick charts for confirmation.