A guide to using various methods in forex trading
A guide to using various methods in forex trading

A guide to using various methods in forex trading

The aim of this article is to provide you with as much information as possible about various techniques and methods which are used in forex trading so that you can make better-informed investment decisions.

The techniques which we will cover here will be:

 

  1. Martingale strategy,
  2. Stop losses,
  3. Bollinger bands,
  4. Forex options,
  5. Moving averages &
  6. Forex arbitrage

 

Martingale Strategy

According to this strategy, a trader should continue to increase their investment amount in every new trade after losing a trade. The base for this strategy is a theory which states that it is highly unlikely that a forex trader will incur losses each & every time and again certainly going to happen.

Stop Losses

It is a technique that helps forex brokers in reducing risks of loss in a situation market conditions are not favorable. This way stop losses work as a safeguard again unseen variations taking place in the market. Additionally, if the market has not been studied correctly then it is not a wise decision to place one-stop loss for all trades which are executed.

Bollinger Bands

These are helpful in measuring volatility present in the forex market and they also assist forex traders in evaluating how the market is moving. The prices are generally higher in the upper band while the opposite is true for lower bans. These bands are also beneficial in comparing price indicator activity & price actions so that right trading plan can be developed. The Bollinger bands are also used in measuring low as well as high trends in prices and compare with prices for earlier trades.

Forex Options

These are one form of forex trading where buyer has the option of selling the contract before its expiry or holding on to it till expiration & afterward fix a position in spot forex. In addition to it, in forex options the purchaser is required to make payment upfront of premium amount which has been decided.

 

Moving Averages

These are helpful if forex broker is required to track price movements of different nature. To illustrate the point we will look at an example, presume that someone wants to trade in USD/AUD and use 5 minute charts being plotted for closing prices. In such a situation, the 5 minute interval closing prices form a point and help in creation of a chart. If all these points on the chart are linked they form the moving average. The advantage of using these moving averages is that they stabilize price variations as well as bring clarity into charts helping traders use them efficiently.

Forex Arbitrage

The term arbitrage normally means sale as well as the purchase of commodities to profit from cost differences present in the purchase & selling prices. Similarly, forex arbitrage means purchase of weak currencies and sale of those currencies which are moving strongly in the forex market. There are different forms of arbitrage usage in the forex market like inter-bourse, cross, and lastly temporal arbitrage.

A Final Note

In a conclusion, we can say that forex trading involves use of many different methods and as a trader, you will have to select those which will yield you the most benefit.

Recent Comments

Write a Comment

Related Bonus

FXChoice 65% Bonus on Your Crypto Deposi
FXChoice 65% Bonus on Your Crypto Deposi
25 September 2022 07:59 PM
Earn up to $250 in referral bonuses with
Earn up to $250 in referral bonuses with
25 September 2022 06:33 PM
Weekly Forex Forecast 16 September to 30
Weekly Forex Forecast 16 September to 30
24 September 2022 02:46 PM
FX Trading 25% New Trader Programmme
FX Trading 25% New Trader Programmme
24 September 2022 12:08 PM
Get Up to $50,000 Frequent Trading Bonus
Get Up to $50,000 Frequent Trading Bonus
24 September 2022 11:52 AM
Get 50% Moneta Markets Deposit Bonus
Get 50% Moneta Markets Deposit Bonus
22 September 2022 02:24 PM
50% Forex Bonus and 100% Forex Free Trad
50% Forex Bonus and 100% Forex Free Trad
22 September 2022 01:18 PM
OctaFX Forex 50% Bonus Money on Every De
OctaFX Forex 50% Bonus Money on Every De
22 September 2022 08:00 AM
Get OctaFX 100% Free Trading Signals
Get OctaFX 100% Free Trading Signals
22 September 2022 03:50 AM
RoboForex $30 Welcome No Deposit Trading
RoboForex $30 Welcome No Deposit Trading
21 September 2022 11:02 AM
Get HF Markets 100% Trading Credit Bonus
Get HF Markets 100% Trading Credit Bonus
21 September 2022 10:28 AM
Get 50% Credit Bonus Claim up to $10,000
Get 50% Credit Bonus Claim up to $10,000
20 September 2022 12:20 PM

Forex Featured Brokers

OctaFX

Free Trading Signals, Broker Type : STP/ECN Leverage up to 1:1000, 50% Deposit Bonus

Start Trading View Profile »
FXChoice

65% Crypto Bonus, Min: Deposit: 100 USD, Broker Type: STP/NDD, 50% Welcome Bonus

Start Trading View Profile »
HF Markets

Minimum Deposit $5, Leverage up to 1:1000 Broker: STP/ECN/NDD, 100% Trading Bonus

Start Trading View Profile »
Global Market

Minimum Deposit $15, Leverage up to 1:200, Broker Type: ECN/STP, 30% Welcome Bonus

Start Trading View Profile »
FXTRADING.com

50% Trading Bonus, Broker Type: STP/ECN, Leverage up to 1:500, $600 Welcome Bonus

Start Trading View Profile »
ATFX

Leverage up to 1:400, Minimum Deposit $100, Broker Type: NDD, 50% Deposit Bonus

Start Trading View Profile »
FXChoice 65% Bonus on Your Crypto Deposits
26 September 2022 07:59 PM
FX Trading 25% New Trader Programmme
26 September 2022 03:23 PM
Get 50% Moneta Markets Deposit Bonus
26 September 2022 08:50 PM
Get OctaFX 100% Free Trading Signals
26 September 2022 02:24 PM
Vonway Malaysia Day 50 USD No Deposit Bonus
26 September 2022 09:08 PM
InstaForex $500 StartUp No-Deposit Bonus
26 September 2022 02:24 PM
FXChoice 65% Bonus on Crypto Deposits
26 September 2022 12:36 PM
JustForex 120% Forex Deposit Bonus
26 September 2022 05:14 PM
FXC $160 Non-Deposit Bonus Giveaway for you
26 September 2022 07:53 PM


moneta_footer.png
Best MT4 Broker
with lowest cost
Exclusive Access to
PRO Trader Tools
Free Trading
Signals
25% Rescue
Bonus New
Zero Swap Fees
on Gold