Success with forex trading depends on the experience and expertise of the trader. Different traders have different temperaments and therefore trading styles of various traders differ. A trader uses different strategies to be successful and no matter how good a strategy is, it does not work each time and for everyone. Some work for some traders while fail for others. The reason again is the difference in the trading pattern and style. However, there are certain strategies, which regular traders often use.
Three of these strategies used by experienced traders are the following ones:
- Stop order strategy
- Rolling pivot strategy
This is a strategy employed for very short-term trades. Scalping refers to chipping in many small profits in a day. By the end of the day, the trader is able to build up a decent total. The basis of the strategy of scalping is technical analysis and traders use indicators like moving averages to make their decisions. With scalping small profits are made by entering and exiting the market. Experienced traders use this strategy in combination with strategies of retracing in a trend, bounce off support and resistance and consolidation. With scalping, the risk is low, but the profits are reliable.
Stop order strategy
To use this strategy a trader has to determine the position, which he intends to take for a particular pair of currency. Once this is decided, he can put a stop order for a buy or sell, depending upon the position taken. With the stop order being placed, the trader need not monitor the price movements of the currency pair. If after the price change, the stop order level is reached, the trader gets his profit or he loses his trade, as the case maybe. Putting up a stop order helps the forex trader in certain ways. If there were a trend going opposite to the interest of the trader, the stop order would save the trader from losing a larger sum, than what he does with a stop order.
Rolling pivot strategy
This is another of the forex strategies used by many traders. The strategy is used by establishing a range of pivot points, over three days by using a pivot calculator. The three set of numbers obtained are the central pivot points and are considered a range, with the highest number being the top of the range followed by the other two. The range thus established helps in providing a reference for entering the trade and exiting from it. Losing trades can be exited from by using this reference point. In addition, with this strategy a trader is restrained from losing a winning position.