With the ever increasing amount of mathematical indicators in the foreign exchange market, the capacity and capability that a trader needs to have in order to process information is also becoming deficient, not to mention that these traders also need to do things outside of the forex trading zone. Luckily, since these indicators are mathematical, there is no problem in using computers for doing the job. In fact, it is their specialty, hence the name of computers. This is what automated forex trading programs are meant to do. They are designed to execute several strategies according to the mathematical indicators that they are programmed to follow. All of these can be done by the program without the owner of the account having to tweak almost anything at all. Now, with this kind of high-powered processing capability and convenience, what else are the advantages of using this kind of strategic tool?
One of the major advantages that attracted the users of automated forex trading programs is its high capability to process very complex mathematical information. Give it whatever indicators, Fibonacci retracing, intermarket data, volume and volatility analysis, pivot points, and whatever else; a forex autotrading program can handle that. Although of course, such mathematical processing can also be done by a human trader, a computer does all of this process within a much shorter time. This kind of efficiency saves the trader the precious time to do many other things, a very invaluable resource for those who understand. Moreover, since a computer is immune against one of the human factor that plague so many traders, emotion. With only the pure rationality of a computer, it will fully rely on its computations without having to be affected by fear, greed, or pressure. This is a major advantage especially for very crucial times in trading.
Now, if you are still new to automated forex trading programs, you might be scared by the possibility that you may no longer have any control over your trading account. As for that, you don't really have to worry much; these programs can be setup where you still have influence over the activities of your account. You can also customize the trading tendencies of your program depending on your own tendencies as well. The indicators that will be used by the program can also be adjusted by including or excluding those that you think are significant, and those that you think are useless.
Forex Trading Strategy, click to Watch our Free Trading Videos and get a Free Trading Stratagies Forex Course! Trading Courses Simple to Understand!
Are You a "Simple" Forex Trader?
There are many attributes that make a great forex trader or any trader of the financial markets for that matter. Profitable traders know that trading must be done without emotion and with an elegant, simple, and adaptable strategy if they are to be successful over the long term.
One aspect of a successful trader that many overlook completely is the simplicity of the trading strategy that is being used. It is my opinion that the simpler the trading strategy, the easier it is to gain proficiency and expertise with that strategy. Continued perfect practice of a simple strategy will drive a novice's expertise, and they will then be able to modify their strategy and mindset to create sizable monetary gains.
Having gone through the many forex trading blogs, websites, and forums, it is not hard to pick out a massive number of very complex and hard to comprehend strategies and indicators that most certainly would baffle a novice. Complexities like these offer no help to the beginning trader. As Einstein thought, "Concepts should be formulated in their simplest form, but no simpler." To me, this has always meant, "Develop an idea so that it is understandable, but without leaving out details that would make the idea incomplete."
I would give this bit of advice to aspiring or novice traders. Toss out all of the forex auto trading robots and secret black box indicators and focus your efforts on learning a basic forex strategy that has proven over time to be profitable. Once your perfect your trading approach, consider adding complexities if you can prove they help your profitability. I think you will find, though, that as you master your forex strategy, you will be subtracting ideas from your strategy rather than adding to it. Why would you do this? Once you find something that builds your account steadily, there is no reason to add to or change you methods.
There is a very easy way to test the simplicity of your forex strategy. Let a beginner look at your charts and then ask them to explain to you how the strategy works and how it can be successful. If they can grasp the general concepts of your strategy within a few minutes (entries, exits, etc), then you have a strategy that will allow you to be profitable in the financial markets for years to come.
How does one identify a simple forex strategy? Let's start with sticking with methods that have very distinct and easy to learn rules. A rule based strategy is simply a strategy that is executed based on a few simple rules.
Example: If price hits a recent resistance level, we execute a short trade. We will place our stop 20 pips below the round number. As price hits the first round number will close our trade. If price is not at least 20 pips away from our support (take profit level), we pass on the trade.
For illustration purposes, let's assume that this strategy has been profitable for many years and now we are going to use it to trade our way to financial freedom. Next, our challenge is to conquer the emotional or psychological aspects of forex trading by trading the strategy without any emotion whatsoever. All great traders are meticulous record keepers and we will practice this as well, setting the stage for future data analysis. Now that we are making money consistently with the strategy and trading without stress, it is time to increase our trading size so we can start earning a living.
You have practiced with precision, without emotion, and you have meticulously written down your trades. Let's increase our trading size now and begin to seriously go after some significant returns. You may be wondering; what time period should I expect this to happen in? For some with financial industry experience, this may take only a few weeks if their trading psychology is beyond reproach. For those with no experience with trading financial instruments, this may take weeks, months, or even years. But don't get discouraged, trading is a skill that, once learned, can provide you with a profitable and rewarding career for life.
Let's review:
Chose a forex trading strategy that is easy to comprehend and easy to execute.
Ensure your chosen strategy has only a few basic rules to follow.
After you comprehend how you will be making money with the strategy, practice the method perfectly until you can trade without fear.
Record your results so you can prove to yourself that you can trade without emotion and are consistently profitable.
Now that you are building your account without stress or emotion, you can increase your risk and the dollars you are trading.
Simplify your strategy, build your skills, repeat and grow as a trader!
Forex trading should not be (but can be) an over complex adventure. Big Brain Forex is your source for a simple and elegant trading strategy that can be used to make strong consistent gains in the forex market.
Simplicity in concept, ease of execution and commitment to your consistent profitability make Big Brain Forex a unique and honest proposition in a industry that is replete with charlatans.
One aspect of a successful trader that many overlook completely is the simplicity of the trading strategy that is being used. It is my opinion that the simpler the trading strategy, the easier it is to gain proficiency and expertise with that strategy. Continued perfect practice of a simple strategy will drive a novice's expertise, and they will then be able to modify their strategy and mindset to create sizable monetary gains.
Having gone through the many forex trading blogs, websites, and forums, it is not hard to pick out a massive number of very complex and hard to comprehend strategies and indicators that most certainly would baffle a novice. Complexities like these offer no help to the beginning trader. As Einstein thought, "Concepts should be formulated in their simplest form, but no simpler." To me, this has always meant, "Develop an idea so that it is understandable, but without leaving out details that would make the idea incomplete."
I would give this bit of advice to aspiring or novice traders. Toss out all of the forex auto trading robots and secret black box indicators and focus your efforts on learning a basic forex strategy that has proven over time to be profitable. Once your perfect your trading approach, consider adding complexities if you can prove they help your profitability. I think you will find, though, that as you master your forex strategy, you will be subtracting ideas from your strategy rather than adding to it. Why would you do this? Once you find something that builds your account steadily, there is no reason to add to or change you methods.
There is a very easy way to test the simplicity of your forex strategy. Let a beginner look at your charts and then ask them to explain to you how the strategy works and how it can be successful. If they can grasp the general concepts of your strategy within a few minutes (entries, exits, etc), then you have a strategy that will allow you to be profitable in the financial markets for years to come.
How does one identify a simple forex strategy? Let's start with sticking with methods that have very distinct and easy to learn rules. A rule based strategy is simply a strategy that is executed based on a few simple rules.
Example: If price hits a recent resistance level, we execute a short trade. We will place our stop 20 pips below the round number. As price hits the first round number will close our trade. If price is not at least 20 pips away from our support (take profit level), we pass on the trade.
For illustration purposes, let's assume that this strategy has been profitable for many years and now we are going to use it to trade our way to financial freedom. Next, our challenge is to conquer the emotional or psychological aspects of forex trading by trading the strategy without any emotion whatsoever. All great traders are meticulous record keepers and we will practice this as well, setting the stage for future data analysis. Now that we are making money consistently with the strategy and trading without stress, it is time to increase our trading size so we can start earning a living.
You have practiced with precision, without emotion, and you have meticulously written down your trades. Let's increase our trading size now and begin to seriously go after some significant returns. You may be wondering; what time period should I expect this to happen in? For some with financial industry experience, this may take only a few weeks if their trading psychology is beyond reproach. For those with no experience with trading financial instruments, this may take weeks, months, or even years. But don't get discouraged, trading is a skill that, once learned, can provide you with a profitable and rewarding career for life.
Let's review:
Chose a forex trading strategy that is easy to comprehend and easy to execute.
Ensure your chosen strategy has only a few basic rules to follow.
After you comprehend how you will be making money with the strategy, practice the method perfectly until you can trade without fear.
Record your results so you can prove to yourself that you can trade without emotion and are consistently profitable.
Now that you are building your account without stress or emotion, you can increase your risk and the dollars you are trading.
Simplify your strategy, build your skills, repeat and grow as a trader!
Forex trading should not be (but can be) an over complex adventure. Big Brain Forex is your source for a simple and elegant trading strategy that can be used to make strong consistent gains in the forex market.
Simplicity in concept, ease of execution and commitment to your consistent profitability make Big Brain Forex a unique and honest proposition in a industry that is replete with charlatans.
Discover The Mechanical Forex Trading Systems
Mechanical Forex trading systems are systems that identify potential trade opportunities for a trader to take. They are referred to as mechanical since a trader will enter the market based on the signals generated by the system in spite of what is taking place in the market. Therefore, they are a great way of keeping emotions at bay when engaging in the business of trading currencies.
A mechanical Forex trading system is usually based on the strategies of the trader. And, it is meant to ensure that a trader follows the rules of his or her strategy no matter what takes place. If you want to come up with a profitable system, you should ensure that it has the ability of identifying trends as early as possible and it also has the ability of confirming if the identified trend is valid or not.
After developing your system, it is essential to trade it in a demo account for at least two months to know how it is working. Trying your system using virtual money will assist you in perfecting it and practicing how you will use it in live market conditions. After ensuring your system adequately meets your needs and preferences in trading, remember to always stick to the rules- regardless of what takes place.
There are some essential components that your system should clearly stipulate. Some of these are the time frame you will use for trading, indicators you will use to identify trends, indicators to confirm the trend, risk management strategy, and entry and exit criteria.
When developing your system, it is beneficial to backtest it; that is, subject it to historical market data with the aim of determining whether it is profitable or not. This will ensure you fine-tune it in case it may not be working according to your expectations.
A major benefit of a mechanical Forex trading system is that it allows you to attain consistency. Most Forex traders are usually faced with the challenge of failing to plan their trades and not trading their plans; therefore, they end up losing a lot of money through avoidable mistakes. Although a trading plan is able to bring good profits, failing to keep to the trading rules can be a prerequisite to your death a Forex trader. Because no trading plan is one hundred per cent efficient, a mechanical Forex trading system make sure that you keep the rules of the game, regardless of the market conditions.
A mechanical Forex trading system is usually based on the strategies of the trader. And, it is meant to ensure that a trader follows the rules of his or her strategy no matter what takes place. If you want to come up with a profitable system, you should ensure that it has the ability of identifying trends as early as possible and it also has the ability of confirming if the identified trend is valid or not.
After developing your system, it is essential to trade it in a demo account for at least two months to know how it is working. Trying your system using virtual money will assist you in perfecting it and practicing how you will use it in live market conditions. After ensuring your system adequately meets your needs and preferences in trading, remember to always stick to the rules- regardless of what takes place.
There are some essential components that your system should clearly stipulate. Some of these are the time frame you will use for trading, indicators you will use to identify trends, indicators to confirm the trend, risk management strategy, and entry and exit criteria.
When developing your system, it is beneficial to backtest it; that is, subject it to historical market data with the aim of determining whether it is profitable or not. This will ensure you fine-tune it in case it may not be working according to your expectations.
A major benefit of a mechanical Forex trading system is that it allows you to attain consistency. Most Forex traders are usually faced with the challenge of failing to plan their trades and not trading their plans; therefore, they end up losing a lot of money through avoidable mistakes. Although a trading plan is able to bring good profits, failing to keep to the trading rules can be a prerequisite to your death a Forex trader. Because no trading plan is one hundred per cent efficient, a mechanical Forex trading system make sure that you keep the rules of the game, regardless of the market conditions.
Forex Strategy Trading Tips: The Forex Trading Every Trader Should Use
As I was planning to trade the markets today, I used my traditional pre-trading routine. I follow definitely the same routine on a regular basis and it makes it possible for me to become more prepared and effective as a trader and as a businessman.
As part of my Forex strategy trading strategies I would like to share with you a checklist that every FX trader should use in order to be more productive, more organized, and maximize your return on investment.
Check your open trades and track their efficiency: This should be the first step you take once you get to your computer. Check all of your open positions and track their performance.
In quite a few occasions stop losses need to be moved to break even or you want to take profit early because of an incoming event (such as non- farm payroll). One of my mentors once told me that "everything that matters should be assessed", this undoubtedly applies to spot trading.
Research the market before you place any new trades: I cannot accentuate enough that you need to analyze the market before you open any trades. When you are in a trade you are not the same. You are thinking about the trade all the time and you are more likely to make non-sense decisions.
At the same time, you will be hitting your head if you see a problem in the market that creates a conflict with a trade you already took.
Read the news or read a news calendar: I am most of a technical Fx trader than a fundamental currency trader; nevertheless, I still try to stay up to date in what is going on globally.
One of the tools that I employ to analyze the fundamentals of the FX Market is the news calendar. A news calendar provides you with a collection of all the important events that are happening in the international economy. A lot of them also tell you the expected influence that each specific news event will have on the Forex market.
Check your risk, stop loss, and tale profit variables: minor things can make a large difference in Forex trading and little mistakes can result on large losses. This is the reason why I always check my risk, take profit levels, and stop loss levels. That's the best way for me to guarantee that that everything is working fine and that I am going to meet my trading desires.
Never let a small mistake become a large loss: I made a choice to include this one as part of the Forex trading checklist because I have seen several traders lose money this way. We are all human and we will commit mistakes from time to time.
One of the most common errors traders commit is taking a trade on accident. I have done it and all professional Forex traders have. This is not that big of a mistake unless you let run and become a larger loss. My advice to you is that if you ever take a trade mistakenly close it immediately, never let a small mistake turn into a big and unnecessary loss!
As part of my Forex strategy trading strategies I would like to share with you a checklist that every FX trader should use in order to be more productive, more organized, and maximize your return on investment.
Check your open trades and track their efficiency: This should be the first step you take once you get to your computer. Check all of your open positions and track their performance.
In quite a few occasions stop losses need to be moved to break even or you want to take profit early because of an incoming event (such as non- farm payroll). One of my mentors once told me that "everything that matters should be assessed", this undoubtedly applies to spot trading.
Research the market before you place any new trades: I cannot accentuate enough that you need to analyze the market before you open any trades. When you are in a trade you are not the same. You are thinking about the trade all the time and you are more likely to make non-sense decisions.
At the same time, you will be hitting your head if you see a problem in the market that creates a conflict with a trade you already took.
Read the news or read a news calendar: I am most of a technical Fx trader than a fundamental currency trader; nevertheless, I still try to stay up to date in what is going on globally.
One of the tools that I employ to analyze the fundamentals of the FX Market is the news calendar. A news calendar provides you with a collection of all the important events that are happening in the international economy. A lot of them also tell you the expected influence that each specific news event will have on the Forex market.
Check your risk, stop loss, and tale profit variables: minor things can make a large difference in Forex trading and little mistakes can result on large losses. This is the reason why I always check my risk, take profit levels, and stop loss levels. That's the best way for me to guarantee that that everything is working fine and that I am going to meet my trading desires.
Never let a small mistake become a large loss: I made a choice to include this one as part of the Forex trading checklist because I have seen several traders lose money this way. We are all human and we will commit mistakes from time to time.
One of the most common errors traders commit is taking a trade on accident. I have done it and all professional Forex traders have. This is not that big of a mistake unless you let run and become a larger loss. My advice to you is that if you ever take a trade mistakenly close it immediately, never let a small mistake turn into a big and unnecessary loss!
The Best Forex Trading Strategy
It's difficult to say that one single Forex trading strategy is the best. In reality, there is no best Forex trading strategy. However, there are many good ones. Ultimately, it depends on you as an individual Forex trader.
The best currency trading strategy for you, won't necessarily be the best for another trader. The strategy you use will depend on a number of factors, such as how much time you have to dedicate to your currency trading and how much previous experience you have in trading currencies.
There are a number of common Forex trading strategies, including: scalping, news trading, range trading, swing trading, trend trading and carry trading - of course there are many more, but these are the ones that most Forex traders consider and especially when just starting out.
As a beginner, you will want to focus more on longer-term trading strategies in the Forex market. You might also not have a lot of time on your hands, because beginners tend to work full-time jobs and only trade currencies in their spare time. Although the currency market is open 24 hours a day, it is closed during the weekends and so many beginners who work full-time jobs have little time to spend on trading currencies. Because of this, they might want to focus on carry trading, for example. Using a carry trading strategy is fairly simple and is a long-term strategy that requires much less time to carry out. Carry trading is also ideal for beginners who want to minimize risk as much as possible.
On the other end of the spectrum you have strategies like scalping, which are definitely not suitable for beginners and especially not suitable for those who also have little time to spend in the FX market. Scalping is all about placing many trades per day. Scalpers focus on making modest profits on each of the tiny orders that they place, so that their modest profits accumulate to a more significant total. A lot more Forex trading experience is needed. If you want to scalp the Forex market, you should wait until you have gained some valuable experience, as well as a lot of knowledge of the market.
There are of course other factors, but when choosing a Forex trading strategy, you need to consider yourself as an individual trader. Think about what kind of time you have on your hands, how much experience you have (if any), what kind of currency pairs you will be looking to trade most, etc. As already implied, if you have little experience you should focus on more long-term strategies that allow you to minimize risk and make more modest (but more certain) profits. These long-term strategies will mean that you won't have to spend a lot of time in front of your Forex trading platform, which will allow you to study more and gain the currency trading knowledge that you need.
In conclusion, there is no best Forex trading strategy. When choosing a strategy to use, it's all about discovering which strategy will suit you and your own individual Forex trading career the best.
The best currency trading strategy for you, won't necessarily be the best for another trader. The strategy you use will depend on a number of factors, such as how much time you have to dedicate to your currency trading and how much previous experience you have in trading currencies.
There are a number of common Forex trading strategies, including: scalping, news trading, range trading, swing trading, trend trading and carry trading - of course there are many more, but these are the ones that most Forex traders consider and especially when just starting out.
As a beginner, you will want to focus more on longer-term trading strategies in the Forex market. You might also not have a lot of time on your hands, because beginners tend to work full-time jobs and only trade currencies in their spare time. Although the currency market is open 24 hours a day, it is closed during the weekends and so many beginners who work full-time jobs have little time to spend on trading currencies. Because of this, they might want to focus on carry trading, for example. Using a carry trading strategy is fairly simple and is a long-term strategy that requires much less time to carry out. Carry trading is also ideal for beginners who want to minimize risk as much as possible.
On the other end of the spectrum you have strategies like scalping, which are definitely not suitable for beginners and especially not suitable for those who also have little time to spend in the FX market. Scalping is all about placing many trades per day. Scalpers focus on making modest profits on each of the tiny orders that they place, so that their modest profits accumulate to a more significant total. A lot more Forex trading experience is needed. If you want to scalp the Forex market, you should wait until you have gained some valuable experience, as well as a lot of knowledge of the market.
There are of course other factors, but when choosing a Forex trading strategy, you need to consider yourself as an individual trader. Think about what kind of time you have on your hands, how much experience you have (if any), what kind of currency pairs you will be looking to trade most, etc. As already implied, if you have little experience you should focus on more long-term strategies that allow you to minimize risk and make more modest (but more certain) profits. These long-term strategies will mean that you won't have to spend a lot of time in front of your Forex trading platform, which will allow you to study more and gain the currency trading knowledge that you need.
In conclusion, there is no best Forex trading strategy. When choosing a strategy to use, it's all about discovering which strategy will suit you and your own individual Forex trading career the best.
How To Develop Your Own Support and Resistance Forex Trading System
Recently, I have received a lot of questions from people who want to learn how they can trade the Forex markets profitably using the best Support and Resistance trading strategies.
Today you are lucky because in this article, I am about to discuss all the pros and cons of developing your own Support and Resistance Forex trading system.
One thing that every new Forex trader should understand is that:
It does not matter whether or not you are trading the Forex markets using Fibonacci Forex trading systems or Support and Resistance trading strategies.
The most important thing that differentiates 1% of the successful traders from 99% of the unsuccessful ones is the thing called Forex trading psychology.
This include all the things every successful Forex trader need to do before, during and after he pull a trigger to open a trade.
Here are some of the questions he or she needs to answer to ensure that he is mentally ready to develop his own support and resistance Forex trading system:
Is he discipline enough to follow his or her trading plan, without been easily swayed by big name Forex Gurus out there?
Is he always trading with a trading stop-loss and follow his strict money management plan?
Does he knows in advance how much he is prepared to lose, if the trade goes against him.
Is he discipline enough to stop trading after he or she managed to reach his daily, weekly or monthly target?
Does his trading plan, also clearly define, what to do if the market goes against you and how much money you are prepared to lose?
Now let me explain what is Support and Resistance trading Levels?
At Support level, assuming that the market is trading up for example, there are more buyers than sellers whereas at resistance level there are more sellers than Buyers.
Every time when the price comes closer to these levels, it will try to break them. If it succeeds to break the resistance level for example, next time when it comes back to it to test that broken resistance it will act as a new support level.
The opposite is also true when it comes to a broken Support level as now it will become a new resistance. In order to be profitable Forex trader all that is required from you is to be discipline enough by trading your favorite systems following some strict money management plan.
It is now time for you to go and create your own profitable Forex trading system that will be mainly based on Support and resistance levels using the information you learn about in this article.
Today you are lucky because in this article, I am about to discuss all the pros and cons of developing your own Support and Resistance Forex trading system.
One thing that every new Forex trader should understand is that:
It does not matter whether or not you are trading the Forex markets using Fibonacci Forex trading systems or Support and Resistance trading strategies.
The most important thing that differentiates 1% of the successful traders from 99% of the unsuccessful ones is the thing called Forex trading psychology.
This include all the things every successful Forex trader need to do before, during and after he pull a trigger to open a trade.
Here are some of the questions he or she needs to answer to ensure that he is mentally ready to develop his own support and resistance Forex trading system:
Is he discipline enough to follow his or her trading plan, without been easily swayed by big name Forex Gurus out there?
Is he always trading with a trading stop-loss and follow his strict money management plan?
Does he knows in advance how much he is prepared to lose, if the trade goes against him.
Is he discipline enough to stop trading after he or she managed to reach his daily, weekly or monthly target?
Does his trading plan, also clearly define, what to do if the market goes against you and how much money you are prepared to lose?
Now let me explain what is Support and Resistance trading Levels?
At Support level, assuming that the market is trading up for example, there are more buyers than sellers whereas at resistance level there are more sellers than Buyers.
Every time when the price comes closer to these levels, it will try to break them. If it succeeds to break the resistance level for example, next time when it comes back to it to test that broken resistance it will act as a new support level.
The opposite is also true when it comes to a broken Support level as now it will become a new resistance. In order to be profitable Forex trader all that is required from you is to be discipline enough by trading your favorite systems following some strict money management plan.
It is now time for you to go and create your own profitable Forex trading system that will be mainly based on Support and resistance levels using the information you learn about in this article.
What Are The Best Forex Currency Trading Strategies?
There are many different types of Forex trading strategies as you probably know by now. However, many traders have trouble deciding which Forex trading strategy is best for them to use. So, here is an overview of some of the more popular strategies that you can use to trade the Forex market with, as well as some of their advantages and disadvantages.
Traditional Forex Trading Strategies
Traditional Forex trading strategies include all strategies or systems that involve taking either a straight buy or sell position in the market. If you don't fully understand the Forex market yet, you should first make sure you can answer the question "what is forex trading?" before you move on to actually learning how to trade. Many traders make this mistake of not learning the basics first, and it's a very costly mistake to make. There are basically three major classifications of traditional Forex trading strategies that traders can use to trade the Forex markets with:
• Software trading systems - Often referred to as "robot" trading systems, these computer software trading systems are usually 100% mechanical in nature and leave little to no room for human discretion. Good in theory, but in reality the markets are too dynamic and diverse to be mechanized effectively over the long-run.
• Indicator trading systems - Indicators are simply derivates of the raw price action of a market that show the price movement in a different format. Some indicators like moving averages and a couple others are useful, but in and of themselves, most indicators are simply more confusing than anything else.
• Classic technical analysis trading strategies - Classical technical chart-reading involves making use of the price bars and the levels they create on a chart. Nothing fancy; just simple price patters and support and resistance trading. This approach is the most logical and typically the most effective when used with a developed discretionary trading sense.
If you are totally new to trading Forex and want to get a thorough explanation of all the basics of Forex and Forex trading strategies, check out this free beginners forex course.
Forex Binary Option Trading
Many traders become intrigued with the possibilities of trading Forex with binary options strategies, and rightly so, binary options are a relatively new and very exciting way to trade the Forex market. Whereas with traditional Forex trading strategies the trader must manage the position and decide when to close the trade out, when you employ forex binary options you only need to be right about the direction of the market when the option expires. If you pick the direction correctly when your binary option expires, you make money, if you are wrong you lose only the money you paid to buy the option. There are call binary options and put binary options. If you think the market will be higher than the current prices at the expiration of the binary options, then you buy a binary call, if you think it will be lower at expiration then you buy a binary put option.
Traditional Forex Trading Strategies
Traditional Forex trading strategies include all strategies or systems that involve taking either a straight buy or sell position in the market. If you don't fully understand the Forex market yet, you should first make sure you can answer the question "what is forex trading?" before you move on to actually learning how to trade. Many traders make this mistake of not learning the basics first, and it's a very costly mistake to make. There are basically three major classifications of traditional Forex trading strategies that traders can use to trade the Forex markets with:
• Software trading systems - Often referred to as "robot" trading systems, these computer software trading systems are usually 100% mechanical in nature and leave little to no room for human discretion. Good in theory, but in reality the markets are too dynamic and diverse to be mechanized effectively over the long-run.
• Indicator trading systems - Indicators are simply derivates of the raw price action of a market that show the price movement in a different format. Some indicators like moving averages and a couple others are useful, but in and of themselves, most indicators are simply more confusing than anything else.
• Classic technical analysis trading strategies - Classical technical chart-reading involves making use of the price bars and the levels they create on a chart. Nothing fancy; just simple price patters and support and resistance trading. This approach is the most logical and typically the most effective when used with a developed discretionary trading sense.
If you are totally new to trading Forex and want to get a thorough explanation of all the basics of Forex and Forex trading strategies, check out this free beginners forex course.
Forex Binary Option Trading
Many traders become intrigued with the possibilities of trading Forex with binary options strategies, and rightly so, binary options are a relatively new and very exciting way to trade the Forex market. Whereas with traditional Forex trading strategies the trader must manage the position and decide when to close the trade out, when you employ forex binary options you only need to be right about the direction of the market when the option expires. If you pick the direction correctly when your binary option expires, you make money, if you are wrong you lose only the money you paid to buy the option. There are call binary options and put binary options. If you think the market will be higher than the current prices at the expiration of the binary options, then you buy a binary call, if you think it will be lower at expiration then you buy a binary put option.
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