If you are planning to start a forex business and want to gain handsome profit via forex trading business from the market then you need to have forex strategies. The strategies make a forex trader more competent and confident and enhance his / her capabilities in making the right calculations and decisions about the market. The market is always volatile and the exchange rates are always changing therefore decisions based on emotions and advices from unreliable sources can lead to loss.
There are various forex strategies available which are suitable for different client needs. The strategies that will be followed by forex traders are mainly classified into two types one is a profit maximizing strategy and other one is risk minimizing strategy. The strategies differ from trader to trader because every trader has his needs and trading abilities. Therefore a forex strategy should keep many factors in mind like risk tolerance, currency pairs trading, account size, initial investment, geographical advantages and disadvantages, the broker to which he is affiliated, the trading system he uses and a short term or long term profit goal.
The most utilized profit maximizing forex strategy is known as leverage. In leverage a forex trader can borrow more funds from his broker if he has some amount in his account. For example if a forex trader has $1 in his account than he can borrow $100 from this broker. Day traders can get more leverage than other traders because the ratio of leverage differs from broker to broker and the type of contract trading.
One of the most popular risk minimizing strategies in forex is stops loss order technique. This strategy allows traders to stop their trade at a present price thus minimizing the loss. This strategy has been widely utilized by traders for risk minimizing. In addition to this strategy another stop loss variation is trailing stop loss technique which trader’s utilize only when prices are falling. There are various other stop loss technique variations available but it depends on the broker to which you are affiliated.
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There is another strategy related to forex trading business which is known as automated order entry. In this strategy a trader enters into a trade at the present price rate automatically. The main favorable reason of automated order entry is that it helps traders to enter the market at the most favorable time. Forex traders also use strategies like forex futures and forex options to recover their losses. These strategies help traders to buy or sell currencies at a predetermined rate
Despite of these strategies forex traders also utilize other various strategies like choosing currency pairs, trading hours, entrance and exit price and etc. The main objective behind every forex strategy is to minimize the risk and maximize profitability. However every strategy has some risk associated with it but utilizing these suitable strategies a trader can minimize the risk factor.