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Forex Trading Strategies

There are 2 basic forex trading strategies used to identify trading opportunities in the forex market. The first strategy, technical analysis, uses charts, mathematical analysis, trend, support and resistance lines and so on.

The other, fundamental analysis, uses financial, political and economic information to decide on trading calls.

Under these two main strategy lines there are hundreds of different strategies to choose from.

Also, many use a combination of the two main strategies. For example, technical analysis trading calls may be overruled by fundamental analysis information.

Forex Trading Strategies – Basic Strategies

There are many examples of successful traders using both fundamental and technical analysis. Which one you should choose is dependent on what you’ll be most comfortable with.

If you choose fundamental analysis exclusively, you have to follow current breaking news, indicators, as well as political trends to make money. Using fundamental analysis for trading calls requires deep understanding how the markets work and how the markets will react to news.

You can also analyze fundamental information with econometric tools to make trading calls.

If you choose technical analysis, you will have to learn a technical analysis trading style that suits you best. There are hundreds of technical trading styles to choose from with some using chart patters, others mathematical formulas, for example.

Most of the technical analysis rules have the benefit of being systematical, making testing a strategy on historical data comparably easy.

Forex Trading Strategies – Advanced Strategies

There is a lot to learn from hedge funds for anyone willing to know more about forex trading strategies. These strategies are actually sub-strategies to the two basic strategies, fundamental and technical analysis.

Olsen, a Swiss finance research company, has classified hedge funds according to the trading strategies of each one. According to the company’s classification, there are currently four major trading strategies:

  • Event driven
  • Long/Short strategies
  • Relative Value
  • Tactical trading

If you’d like to learn about these strategies, some of these strategies are explained in books. Also, some books offer specific forex trading strategies and trading techniques based on these trading styles.

Also, to learn about these strategies, mentoring programs may offer mentoring on a specific trading style, especially if you ask to be taught on a single line of strategy.

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