Friday, 14 December 2018

How to Choose the Best Forex Strategy to Maximize Profit

 Have you ever felt "stuck" with a forex trading strategy that you applied? Do you often wonder "how good is it that I use this strategy? So it's a day trader, swing trader, scalper, or what?" Such questions are certainly not only brought by one or two traders, considering there are enough trading strategies in forex. Traders must know how to choose the best forex strategy so that the profit can be maximized. How to? Take a look at the guide below.

Best Forex Strategy According to Rayner Teo
As one of the experienced traders, Rayner Teo did not hesitate to share various tips about trading. If in the previous article Rayner shared tips on how to become a successful trader, this time he would share tips on choosing the best forex strategy to produce maximum profit. According to him, there are currently 5 types of strategies commonly chosen by forex traders:

1. Position Trading

Position Trading is a long-term strategy that allows traders to hold positions for several weeks or even months. With this strategy, traders use forex trading more as an investment. Because of its long-term trading, the analysis carried out is usually more in-depth, in order to find out the external influences on the currency that you want to buy. One of the most widely used analytical methods in Position Trading is trend following (trading follows trend direction movements).

2. Swing Trading

If you are a person who has a medium-long target in forex, then Swing Trading can be tried. Swing Trading is defined as one of the trading strategies that places Buy or Sell execution at price reversal points, so that it can get optimal profit when prices are moving in a certain direction. Commonly used timeframes are 1D or 1W. According to Rayner Teo, to open positions, Swing Traders often Buy in Support and Sell in Resistance, Trade Breakout, Trade Pullback, and Bounce Trade. Their analysis usually involves observing candlesticks and the use of the Moving Average indicator.

3. Day Trading (Intraday)

As the name implies, trading with this strategy means you have to open positions, both entry and exit, on the same day. If on the morning you buy GBP / USD, then you have to sell GBP / USD to the maximum at night. Because the entry and exit positions are carried out on the same day, the profit and loss can also be known on the same day. Such techniques are easier to help traders to quickly move on and focus on finding new opportunities the next day. Because Day Trading is a short-term trading strategy, the usual timeframe is 1H or 4H.

4. Scalping

Scalping is a trading strategy at a low timeframe with the aim of gaining fast profits. This one trading strategy is actually not recommended for beginner traders, considering the time needed to analyze and plan open positions is very short. Scalper requires accuracy and high level of concentration to benefit from the fast-moving forex market. So, Scalping strategies cannot be done during office hours or when traders cannot focus on the trading platform.

5. Transition Trading

Transition trading can be considered as a new strategy. According to Rayner, he "accidentally" discovered this strategy when conducting exclusive trade. In this strategy, traders usually enter at a low timeframe. If the market moves according to its expectations, then it will increase Take Profit or Stop Loss at a higher timeframe.

So, which strategy is the best?
During his journey as a trader, Rayner claimed to have met with many traders who felt they did not match the trading strategy used. As a result, all the sacrifices they made, starting from the material, time, to effort, felt futile. Well, so that you avoid the "best forex strategy but (it turns out) wrong", pay attention to the following three things.

Read to Test the Manual System Using the Automatic Trading System
Read to 3 Tips for Trading with the RSI Indicator

1. Determine your trading goals.

The first thing you have to do is determine the trading goals, whether to just earn income or increase wealth. If you only want to earn income, you can trade at a low timeframe. Especially if you have plenty of time to "glare" at the computer screen, then you can make Scalping and Day Trading techniques a choice.

While if you want to add wealth or use forex as an investment in the future, then use trading techniques with medium-long-term prospects, such as Swing Trading or Position Trading.

2. Calculate how much time you can spend on trading.

Although it sounds trivial, it turns out that the duration of time you have to trade can influence the choice strategy. If you have another main job, or you can't standby 12 hours in front of the computer, then don't try trading with Scalping or Intraday techniques. It's better if you use Swing Trading or Position Trading techniques, because they don't require you to stare at market movements for a full day. While if you have enough or a lot of free time, you can use Scalping or Intraday.

3. Choose the strategy that best suits your goals and personal

In general, trading strategies can be divided into two:

High Win rate with a low Risk / Reward Ratio, or
Low Win rate with high Risk / Reward Ratio.
The last thing you need to do is adjust the strategy to your personal achievements. If you want the results as the first point, then you can choose the Swing Trading strategy. Conversely, the Position Trading strategy can be used to obtain low win rates and high Risk / Reward ratios. Which of the two options above best suits you? .

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