Forex Strategy

Forex strategies involve the combination of indicators and price patterns for the derivation of tradeable signals. There are also fx trading strategies based on fundamental factors, but all short term trading strategies must include some technical component. In this section we aim to explain in detail the various aspects of forex trading strategies.

Forex trading strategies

 

Currency Carry trade — let the interest rates do the work

Experience shows that the most important driver of currency trends is the interest rate differential of central banks. Many financial strategies attempt to capitalize on this knowledge, but the most basic and widespread strategy is the carry trade. Read more...

Using the COT reports to predict forex price movements

Before examining the COT reports and a few ways of using them, let us note two important details: Read more...

Trading managed currencies — exploiting central bank policies to make a profit

Managed currencies are those such as the Singapore and Hong Kong dollars, the Chinese yuan, the Russian ruble, where the Central bank doesn’t control the day-to-day fluctuations of the currency, but attempts to manage the direction of the trend by... Read more...

Trend Following — the most popular strategy in all financial markets

Trend following is perhaps the most popular long-term strategy in all financial markets. It is exceedingly effective and profitable when the conditions are favorable, is quite straightforward in its methodology, and there are many individuals, past and present, famous or... Read more...

Exploiting currency options expiries for forex trading

Options are contracts that give the buyer the right to buy or sell an asset at a pre-specified time and price. In return, the seller receives a fee for writing the contract which is termed a premium. Read more...

Using the z score to determine trade size and boost performance

Suppose that we have a trading method which gives us great confidence, produces satisfactory results over a long time, and which refined through a long period of study and experimentation. Read more...

Market cycles and currency trading

In this article we will discuss the relationship between market cycles and forex through a dialogue between a beginner and a successful trader. The successful trader is ST, while the beginner is B: Read more...

Martingale trade sizing and the gambler's fallacy

Over the years, forex has acquired such a bad reputation that there are books published sold with statements similar to the below: Read more...

Trading the news releases

News and economic data are the main drivers of market developments, but in a little different way than many traders think. While many novice traders expect important economic events and news releases to be reflected on the price immediately, complain... Read more...

Predicting market extremes using the put/call ratio

Options have long been popular with forex traders for hedging, for directional bets, maximizing profit or for more complex strategies that are out of the scope of this article, but over the years, the record of options trading for buyers... Read more...

Trading pegged currencies — low risk fixed currency trades

A fixed or pegged currency is one where the currency’s value is matched to that of another asset. The asset may be a single currency, or it may be a basket. Read more...

How to create a forex strategy based on technical analysis

Technical strategies aim to predict future prices on the basis of past developments. All that the technical analyst is interested in is the price, and news, or data have no bearing on his decisions. Read more...

What kind of stop-loss order should a trader use?

In this article we will discuss the various ways to implement a stop loss order. Every trader who has had dealings in any of the financial markets is familiar with placing and executing a stop loss order, but many are... Read more...

Gambler’s conceit

That high leverage is dangerous is well-known to most people, but it is not unusual to make spectacular profits with a highly leveraged account, just as it is not unusual to throw three heads in a row during a coin-tossing competition. Read more...

Clustering Illusion — seeing non-random sequences in a string of random data

Clustering Illusion is the tendency to see non-random sequences in a string of random data. It is especially dangerous for traders, because perceiving a non-random pattern in a random string of wins or losses may lead us to increase leverage... Read more...

Technical strategies based on crossovers

In this article we will study the various kinds of crossovers and how to exploit, interpret and confirm them based on the interaction of indicators with the price and each other. Read more...

The bond market and currency prices

Currencies are the basic building blocks of all economic activity. A grocery, a military contractor, a mortgage borrower, and even gangsters evaluate their economic plans in terms of currencies. Read more...

Interest Rates and Volatility — correlation between interest rate gaps and volatility

Volatility in the currency markets is influenced by a number of factors foremost among which is the risk perception of financial actors. Risk, of course, can be defined in terms of many different variables including politics, natural disasters, in addition... Read more...

Trade Timing — how to decide entry/exit points

If money management is one half-of trading, determination of entry/exit points constitutes the other half. No amount of successful analysis will be useful if we can't determine good trigger points for our trades. Read more...

Forex Scalping – Extensive guide on how to scalp forex

Forex scalping is a popular method involving the quick opening and liquidation of positions. The term “quick” is imprecise, but it is generally meant to define a timeframe of about 3-5 minutes at most, while most scalpers will maintain their... Read more...