The decision to enter a substantial financial market like Forex is indeed a noble and accurate choice. It is the world’s largest financial market, and one can proudly be associated with the same. But before you go ahead into this market, you need to realise a bunch of aspects. The market did not turn out to be so huge without considerable elements coming into the picture. Since these aspects are present, it would not be advisable to step in without taking the right form of measures. When these points come after thorough and advanced analysis, you can be assured of strong results. Hence, to shed more light on the same, here’s the essential guide that you need for Forex Trading.
Strategies
The need of the hour cannot be formulated into a specific term known as “strategies”. Yes, they are essential aspects that will curb your approach towards the market and help you head in the right direction. So to help you out, here are a bunch of strategies.
1. Hedging Forex
This is a unique strategy or method that helps to reduce the risk by taking both sides into consideration. It is known to be an easy way that can promote you to initiate a long and short position on the same pair. For this purpose, the kind of pairs that you choose also need to be looked into. Individual advanced traders tend to use different pairs to make the hedge, ultimately leading everything towards a complicated position. By all means, the best pair for this purpose would be anything involving the US Dollar.
2. Scalping
Scalping is another process that utilises short-term trades to earn a bunch of pips. It is majorly carried forward with a news release and other supportive technical conditions. This particular form of trade can either last for seconds or a few hours. Although it is a risky process, it manages to bring you favourable returns. One should only make an approach towards Scalping by keeping in mind their overall trading position.
3. Position Trading
Position trading is a strategy that does not share any form of similarity between Scalping. In other words, it tends to be associated with the long term aspects of trading and can last for months or years. Since positions are held for quite some time, only a patient trader can make matters meet with this strategy. Huge swings can also come your way, pushing you to leave everything aside. But an analytical approach can help you out.
Currency Pairs
Understanding the details and aspects of some major currency pairs is another move that is going to benefit you. So without further ado, here are few of the major pairs.
1. EUR/USD
This particular combination is a trader’s classic choice, and they all tend to hold on to the same. Since both these pairs also bring in a bankable economy, matters tend to gain a better form of clarity. With the Euro being the base and Dollar being the quoted currency, traders move ahead with this pair.
2. AUD/USD
The Australian Dollar and the American Dollar is an interesting pair that you can depend on. Rates and aspects tend to reach a higher note as the Australian economy has shown positive signs. The US/China trade war does not come into the picture since Australia and China are trading partners. So whenever a trade gets through, or the relationship becomes more substantial, you can expect something good to arise from this pair.
3. USD/CHF
Yes, that’s right. The American Dollar and the Swiss Franc tend to form a considerable form of value. This particular combination manages to bring out benefits since the Swiss economy is something that you can depend upon. Throughout the past, it has shown different signs of financial dependency and thus, merging it with the Dollar makes absolute and complete sense. The lower risk pattern, which is visible throughout Switzerland’s markets is another sign indicating this pairing to be successful.
Recent Impacts
The Forex market tends to be affected by certain situations and decisions that have risen to global standards. So as a move to trade accurately, we need to take a look at these impacts and understand their implications.
1. Brexit
Brexit is far from being over, and its impact can be felt even today. The decision brought forward a sense of uncertainty and traders are left to make drastic choices.
2. Coronavirus
One of the biggest pandemics to affect humanity in recent times has to be Coronavirus. Apart from everyday life, the virus has also taken a toll on global markets and thus, has arrived at Forex trading. Currency pairs like USD/JPY and EUR/USD surged to lower points, making investors all the more anxious. The only outcome for the same would be to wait and watch.
