Forex strategies are theories and principles that are used to create an overall direction for an investor’s currency trading activities. Value Bounding and trending are signals systems and would be used to predict the markets future state. In value bounding, the assumption is that a given currency historically stays within a certain range of values. This is based on the candlestick charting system. If you observe a currency that is near or at its historical low range you might buy it as it will most likely rise.
Strategies for Your Portfolio of Investments
Forex strategies can be much longer term and deal more with your goals for your portfolio. You might maintain a long-term buy and hold strategy to reduce trading activities and target slower growth that is more reliable (more appropriate for the stock market, but still valid). That would be an example of a strategy. You might target currency pairs that are “exotic pairs,” and focus your trades on that sector. Those trades could be day trading activities or longer-term focused and would be examples of Forex strategies.
Some experts do not believe that a strategy is different from a system in that both are used for the same purpose. Each trader has his or her own interpretation of what a strategy is. Forex strategies can be the over-all philosophy or beliefs of a trader or group of traders such as those that follow a “top-down” approach. Top-Down Forex strategies involve analyzing the political, economic and international news looking for indications of the potential future state of a country and its currency. Others believe that this is irrelevant. They might follow the idea that the Forex technicals, the price charts themselves, controls the fluctuations of currency values. Every theory has a champion
Follow the Leader
For the novice currency traders this can be very confusing. Once you have been exposed to Forex strategies and are looking for a strategy of your own there are a several tools that you can use. These are mentors and virtual trading. Find a proven, successful trader and follow the leader, learn the methods that he or she uses and then apply them. However, you should be applying them to a virtual trading account using a good trading platform, such as the ACM Forex trading platform. This will allow you to practice these systems and Forex strategies without risking your nest egg. Give yourself time to develop a feel for the day to day activities and how values rise and fall, then you can apply different methods competently