There are numerous strategies available to allow you to trade in the forex exchange. Some of these strategies work well, others not so well. This article details one strategy that works well.
This strategy has to do with following the trends. Professional forex traders say the trend is your friend, until it ends. Here is an extremely short-term trading strategy that follows the trend. This trading strategy usually has profits of about 40 pips per trade.
The foreign currencies often have dynamic price changes immediately after news stories that pertain to those currencies have been released. These news stories report on various economic metrics, such as the CPI, unemployment, etc. There are economic news stories like these released weekly.
How can you capitalize on this news? As I stated above, the forex market often moves significantly after these news stories. This movement can be 30, 40, 50 or even more pips, immediately. This move can be either up or down. So how do you know if you should be long or short on any particular currency for this strategy? A few seconds after the news comes out, determine which way the currency trend is going. If it is trending up, go long that currency. After you establish your position on this currency, set a tight stop-loss of 10 pips below the current price. Soon the currency will likely move 30, 40 or 50 pips. Once it has, close out your position. If conversely, the currency has trended downward more than 5 pips, then short the currency. Follow this strategy and you will be rewarded with controlled risk.
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