What does it take to be among the ranks of George Soros, Bill Lipschutz, and Stanley Druckenmiller? Razor-sharp instincts for market trends, most certainly, and a keen eye for promising trades, among others. Billions of dollars in annual earnings, too — and in George Soros’s case, daily earnings. He famously (and bravely) bet against the Bank of England and made a single-day profit of $1 billion in September 1992.
It’s unlikely for anyone to become a pro trader overnight, but we at Fair Forex can point you to the right place to start. As a forex trading broker, we don’t just provide a trading platform but also data, trading calculators, and access to more experienced traders and mentors.
Here are three advanced forex trading strategies employed by seasoned traders that you should also learn to use.
Hedging is a risk-management strategy that applies to many business aspects. For investment and forex trading, it means reducing potential losses by taking another opposite position in a related asset. Essentially, it is taking both sides of a trade at once. If you lose on one position, the losses will be offset by the gains of the other.
Hedging is ideal for traders with a low-risk appetite. You can also divert to this technique when all your market indicators state that your current position is a losing one. If you hedge quickly, you can offset the entire loss or at least keep it as minimal as possible.
The disadvantage with hedging is that your gains are often significantly reduced. If you want to make bigger profits from trading foreign currencies, you’ll need to take bigger risks. More importantly, study the market more so that you can predict the rise and fall of prices more accurately.
This technique puts together multiple technical indicators, trends, multiple averages, and other data points. Five calculations make five lines that are plotted onto the chart:
- Conversion line
- Base line
- Leading Span
- Leading Span A
- Leading Span B
Once calculated and plotted, the chart will show a “cloud” which then becomes the reference point for key technical indicators. Traders can then predict at which point a price might find support or resistance.
For example, an uptrend is confirmed if the Leading Span A is rising and goes above Leading Span B. Likewise, a downtrend is confirmed if the Leading Span A is falling and runs below Leading Span B.
A simpler way to read the chart would be to look at the position of the price relative to the cloud. If it is above the cloud, the price will likely move up. If it’s below the cloud, the trend is likely going downwards. If the price is in the cloud, the market is currently in transition.
The Ichimoku Cloud technique may seem complicated at first. But as you become more familiar with and adept at reading charts, and with constant practice, this strategy should become increasingly easy to do.
This trading strategy is nowhere near as complex as the Ichimoku Cloud; but, it is so effective that many seasoned forex traders who want to generate profits do it.
Scalping, as the name suggests, takes small profits off of small price movements within a trading day. The goal is to make as many small wins as possible and let the profits accumulate. Scalpers succeed when their winning trades far exceed their losing trades. Pure scalpers or forex traders who use scalping as their primary trading style can generate more profits with this technique than holding a position on major currency pairs in hopes of bigger returns.
Here’s how it works: scalpers enter a trade and exit quickly, sometimes within seconds. Scalpers can increase their gains by placing large trades, but that could run counter to one of the main attractions of the strategy, which is to reduce risks and losses. So, the best way for a forex trader to make big profits from scalping is to make hundreds of trades — winning trades — on a trading day.
Practice Advanced Forex Trading Techniques at Fair Forex
Need help in mastering any of these strategies? Get in touch with some of the professional traders at Fair Forex. We help retail traders like you succeed and win at forex trading.
Use our peer support program and free trading tools and indicators to master advanced trading strategies. Contact us for details.