CFD and forex trading strategies are similar in many ways. Indeed, many of the strategies that are applied in the forex market are also applied in the futures market. Trading, however, does not only involve applying strategies. It also involves a huge commitment on the part of the trader. A trader must be disciplined, knowledgeable and ready to learn. The combination of strategy and knowledge is the key to success in the forex and CFD markets. There are many strategies that you can use to trade in these markets. The following are some of the best trading strategies you can use in 2018.
Range trading makes extensive use of analytical tools. As opposed to other forms of trading, this method follows the market action actively and makes use of the current signals to determine the right business moves. Range trading is, therefore, one of the best strategies to use if you are keen on making big profits. The method works on both the CFD and forex market because they both rely on support and resistance. In range trading, traders buy assets when the price is low and then sell them when the price is high. In short, range trading involves:
- Observing the price movements
- Using analytical tools to come up with trading strategies
- Entering and exiting the market when required
Trend following even many ways similar to range trading. The main difference, however, is that trend following is a long-term strategy. When trend following, traders can hold assets for a long time until they feel that the market right for investment. This method involves buying when the price is low and waiting for as long as possible before selling. Trend following also makes the use of analytical tools which track the price movements. This strategy also relies on support and resistance and traders always look for the breakout moments in the market before they can make a move.
The scalping strategy is extensively used by traders who are either beginning to trade or those who are looking to cut down the risks in the market. This is mainly because this strategy relies a lot on minimizing the risks to the lowest possible levels. Scalpers rely on observing the short-term changes in the market price and make offers immediately the bid price changes. Since this strategy is very intricate, admiralmarkets.com.au recommends the use of the popular trading platforms for this strategy to be worthwhile. Trading platforms can be crucial in identifying the little price movements that occur in the market whether in the span of minutes, hours, or days.
This method uses aspects of both long-term trading and short-term trading. Swing trading involves holding assets for a set period of time and observing the market as the changes in price occur. Traders can choose to hold the assets for as long as possible or they can choose to sell them immediately the price changes. Swing trading is usually a short-term strategy which relies on the signals on the market regardless of when they occur. In any market, the signals can either change rapidly or slowly if the market is allowed to play out. This is why string traders often disregard the aspect of time when using the strategy to trade.
Other popular strategies
There are a number of other popular trading strategies that can be applied in the CFD and forex markets. A strategy like news following is for instance used by a number of people in the market. This strategy is not efficient and effective however because it can be misleading at times. A number of traders also use the contrarian strategy to trade. The strategy is however used by the minority and it is not always reliable.
Since there are so many strategies that you can use to trade in the CFD and forex markets, the most important thing is not which strategy to use but rather how you will use it. The first step should be to identify which strategy works best for you and then come up with tactics that you will adopt in order to survive in the market. In both CFD and forex, a combination of knowledge and proper tools is what will give you success in the long-term.