Traders can apply various methods to achieve the desired goals in currency trading. Each technique involves market research, thorough analysis, and planning rather than relying on the occasion and luck. Some of the basic and widely applied trading strategies are described below.
Support and resistance
Support and resistance trading is a technical analysis method, where traders predict upcoming trends of a valuable security by analyzing previous chart info. Dealers conduct analysis on the chart peaks and troughs indicating “support” and “resistance” levels. Support is the level at which the security price has rarely fallen beneath, whereas resistance is the level at which the security price has not often exceeded. In the majority of trading cases, a valuable security has levels of support and resistance and will be traded in this range because of moving between these points. It can be crucial to be aware of support and resistance points in aiding investors when making decisions concerning the opportune moments to open or close an operation. Market players are used to applying the analysis to reveal potential points of support and resistance in future. If an equity price is moving between support and resistance, the strategy that is widely applied is to buy a stock at support and sell at resistance.
This strategy is also known as fundamental analysis. It is the study of economic news to make a try and anticipate the market conditions that may potentially take place in future. Traders monitor breaking news and large enterprises data releases that will most probably influence a particular market. Employment rates are also the factors which are likely to affect the Forex market. For example, if it has been reported that employment is in decline, the economy may demonstrate the weakening tendency. That is stipulated to the fact that fewer people have money available to spend on non-essential goods. At the same time, if the employment rate is increasing, people will likely to spend more, and the resulting stronger economy will often lead to a stronger currency.
Aside from these most popular strategies, market experts point out several other techniques applied less and worth mentioning apart.