With its trading volume of more than 2 trillion dollars, Forex is currently the biggest finance market of the world and offers investors numerous advantages. Among these advantages are: low trading costs, a tremendous amount of liquidity and available leverage. The 24-hour nature of Forex trading opens the door to countless strategies, but in this article we will discuss briefly 2 popular Forex strategies: Range trading and Trend trading.
A trend is a general direction of the price of an asset or market, which can apply to bonds, commodities and any other market, characterized by a long-term movement in volume or price. Trend trading is among the most risk free and easiest methods to make money in the market. In order to have success in trend trading, you should identify and catch the trend after it has started and get out of the trend after the trend reverses. Investors generally prefer to trade the long term trends and they don’t have to be concerned with the day to day market volatility. With trend trading traders can catch 60 to 80% of many intermediate term and long term market movements and take large profits out of the market. With Trend trading you can earn a lot of money and don’t have to watch the market or stocks on a minute-by-minute or even a day-by-day basis.
Range trading in foreign exchange is Forex traders’ attempt to “buy low and sell high.” Although this may seem very basic at first glance, putting it into practice can prove somewhat elusive. Range trading is a great way for generating a profit in a sideways-moving market. At times, there is not much volatility in the market, so the price remains the same for longer periods of time, making it difficult to generate a profit with standard binary options. However, with range trading you can make a profit in these conditions as well, because when a price stays within a particular range, your trade will finish in the money, no price movement is even required. Range trading is also used in trending markets, as a trader can also generate a profit, if the price moves out of a particular range. Range trading offers traders the flexibility to generate a profit in almost any type of market, it is considered to be a great addition to any binary options trading portfolio. In fact, your trades are based on a specific price range, this means that you have the following options: either choosing to predict that the price will stay in that range or moving out of that range depending on the market conditions. If you are sure that the price of an asset will finish on a particular price, then range trading is a good option for you.
If you remain disciplined about the inevitable losses and understand the different money-management schemes involved in each strategy, you will have a good chance of success, as Forex market is well suited for both approaches.