Forex trading tactics? Starting with a definition of strategy and tactics for a better understanding. Simply put, strategy means what is to be achieved and the tactics that are like how I reach it. When trading on Forex, the strategy is just so easy to define. Earn Profit! The tactic is a little more difficult, but more in the following text.
What is trading
Now let’s clarify the term trading. Trading on Forex usually affects a currency pair that is traded. The exchange rate between the two currencies is changing. Ongoing. This change is subject to various influences and has a certain trend. This is what the Forex trader wants to earn. The trader’s development follows the chart.
The red and green areas show the changes in the course at the previous time.
In this chart the price development can be observed. In the lower figure, Bollinger bands were laid over and so the trend for the trader could be made well visible.
The goal of the right forex trading tactics
In the charts shown, the price development can be tracked. The goal is now to make the right decisions for the time of commencement and completion of trading activity. The optimal start is, of course, the moment when a trend begins. And the time for the stop, of course, is the time when the course is highest. In order to determine this time with a relatively high probability, various techniques are used. Since the chart represents the development of the past, it cannot be used as a target for decision-making aid. It serves only as a basis for analysis. Another goal is to set limits. The top limit is set to take profits, at a point that is expected to LIEGRT shortly before the turnaround of the trend. The limit down to avoid excessive or complete loss of the bet when the course breaks.
The purchase signal
One can speak of a purchase signal if the exchange rate has exceeded a certain price mark in which it has always risen in the past. Another option is information, which in the past has led to a rise in exchange rates. For example, the central bank’s announcement of the increase in the key interest rate. A still possible purchase signal is an increasing demand for a particular currency, as the other parts of the currency pair are strongly declining. A crisis or a political event can be responsible for this. It is important to keep the trader up to date and to use information sources.
The sales signal
Sales signals can actually be viewed in the opposite way. Still some examples. One currency always has a certain purchasing power in the internal market. Using the BigMc method you can put this in the comparison to the second currency that is traded. This can also be used to derive a realistic course. Should reach the course heights, where everyone clear we. Here is soon a factually justifiable limit reached, this would be a clear sales signal.
The thick green Line could represent a possible exit limit. The courses were hardly or not at all above this value. The red line shows a possible limit, which can be set to prevent major losses. The upper value is called take profit the lower stop loss. Every trader decides to set the points. The decisive factor is the willingness of the acting person to take risks.
Chart analysis is one of the forex trading tactics, a possible tool to successfully pursue your own strategy. Evaluating the charts, tracking trends and analyzing them allows the trader to find tactics for setting trade marks, selecting currency pairs and structuring trades with limits. Tactics should be reviewed and optimized on a regular basis. Ertwas more time to analyze helps to avoid losses and increase profits.