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9 Tips for Short-Term Forex Trading Strategies In 2020

Despite many people entering the Forex market with the idea to become millionaires, it is harder than merely opening and closing trades. Just a number: it is known that over 90% of traders lose money in the first six months.

Despite many people entering the Forex market with the idea to become millionaires, it is harder than merely opening and closing trades. Just a number: it is known that over 90% of traders lose money in the first six months.

However, with the right combination of effort, study, and advice, you can avoid the guillotine and become a successful Forex trader. In this article, we will take you into the best tips and tricks for short-term forex trading.

Because, as American singer Kenny Rogers said in his song The Gambler, “If you’re gonna play the game, boy you gotta learn to play it right.”

What is Short-Term Forex Trading or Day Trading?

Also known as day trading, short term trading is a popular investing technique that involves trades and positions opened and closed over a short period of time, usually within the same day.

Most traders consider it very attractive due to the profitability associated with the practice. However, it can also be dangerous as it often encompasses poor risk management and exposure to swings and high volatility.

It provides relatively smaller gains per position but has a higher frequency of trades. In the end, it produces a solid amount of pips every day.

Should you choose short term forex trading or long-term forex trading? There is no single answer to that question as it is all about your trading skills, your psychology, and the money associate to your trading account.

Long term vs Short term in price chart

Best Forex Trading Tips and Tricks

In the investment market, it all depends on your trading style and your personality. However, most of the best short-term forex trading tips and tricks will be related to tools that will help you stay in control of your position and, therefore, portfolio.

Here is a list of the ultimate forex tips, tricks, and advice that can help in your trading performance.

1. Know yourself and the kind of trader that you are

Knowing yourself can be seen as an obvious task, but it is not. As every market is different, so is every trader. You have your own personality, emotional reactions, and goals.

Some traders are more comfortable with low-risk positions like a safety net, but others like the adrenaline of betting against the market. Who are you? If you are the kind of person that likes to follow people and leaders, perhaps you would like to be a trend trader.

On the other hand, if you are a kind of renegade person who always looks for a different approach, a hidden agenda, or the round pegs in the square holes. Then, you would fit better as a contrarian trader. Then keep that on your mind when developing your skills.

2. Choose the best trading platform for you

There are thousands of brokers in the industry, and each one is different from the other. Some brokers are better for beginner traders, and others are excellent choices for experienced investors.

Do you want automated trading? Do you prefer being extra protected in terms of regulation? Or do you like to trade on the go with mobile apps? Ask and serve yourself accordingly.

Every broker has its own solutions, fees, base currencies, and deposit and withdrawal processing times. The best option to check is to watch for broker comparison tables and after selecting one, opening a demo account to test all of the brokers’ features.

Forex demo account

3. Get experienced in more than one trading strategy

Mastering the Forex market should be your premise when starting your investment career. You should learn more than one trading strategy that fits your trading skills and styles.

In that way, you will see the market with a more holistic approach. This does not mean you will use hundreds of technical indicators, which is not recommended. But it can help you if you have different strategies to choose the best trading plan at every moment.

4.Start with a telescope and finish with a microscope

It will help your trading performance if you know what the current tone of the market is. For that, it is good to start your analysis from the bigger timeframe such as weekly or daily charts, and then go into shorter time frames such as 1 hour, 15 minutes, etc.

In this way, you will understand the whole trend and the direction the market is moving. Then, you will be able to identify potential short-term opportunities in market situations such as support and resistances, overbought or oversold conditions, or when it is not a good idea to go short or long.

Remember, the trend is your friend, even if you are a contrarian trader.

5. Check correlations

Correlations are a powerful tool to confirm trades but also to potentially double profits. Use currency correlations to your advantage and to evaluate the risks and profitability of traders.

Statistical correlation talks about the relationship between two assets. It could be positive, but also negative. It means that when it is positive, one asset tends to mimic the other, for example, the euro and the Swiss franc. On the other hand, when it comes to talking about negative correlation, one security goes the opposite of another.

Positively correlated pairs are EUR/USD, GBP/USD, and AUD/USD. Negatively correlated pairs are EUR/USD against USD/CHF or USD/JPY.

Long story short, you buy gold and also sell the DXY if the greenback is trading down. For instance, when you go long EUR/USD, it is natural to go short on USD/CHF.

Forex correlations chart

6. Make a trading plan

Trading plans are the roadmap you will follow when starting your position. It should contain entry and exit points, stop loss, profit-taking, and risk/reward ratio.

The plan will keep the information about how much you are buying or selling, your potential profits, the levels to watch, and finally, it provides you with an exit point in case everything goes wrong.

Having a trading plan is one of the top items here in this list of Forex trading tips, as it will keep you in line with your objectives. But also, you should understand that the Forex trick is that you should follow your plan.

7. Protect yourself, manage your risk

Protecting yourself and your money is one of the cornerstones in your trading life. Remember that the market will open tomorrow, be sure your portfolio will be there too.

It is essential to calculate the risk associated with every trade and know when to wait and when to start trading. The market provides opportunities every single day, do not rush!

Finally, understand that it is better to stop trading when you are having a streak of losing days and take some days off. It will clear your mind, and you will return to the market with a sharp brain. Last but not least, never trade without stop losses and limit your risks.

8. Trade with facts, not emotions

This may sound basic, but it is not. Trade what you see, not what you hope to see. Wait for the right moment and keep your emotions out of the deal. I know that this is hard but understand yourself and learn how to deal with you.

Two intelligent Forex trading tricks are to maintain a clear trading plan and keep a detailed trading journal.

Multiple tests of supportive moving average in a trend

9. Keep learning Forex and be on top of new technologies

As Isaac Newton once said, “what we know is a drop, what we don’t know is an ocean.” The Forex market is one of the most challenging enterprises globally, but also, one of the most potentially rewarding.

Forex is hard because it changes every day at every second. What used to work in the past is not going to necessarily work now. It is imperative to keep studying and testing the market with new strategies, research, and both technical and fundamental topics.

Keep an eye on technology and use it for your advantage. Try back-testing software, automated trading, and technical indicators to enhance your trading and research.

Finally, keep a good internet connection that sustains your platform any time you want to use it.

Final Thoughts

According to a 14-year research on the Taiwanese stock market by the University of California and the Peking University, over 75% of participants quit after two years, and 90% of individual traders left the investment world after four years.

The study also showed that investors engaged in more traders after profitable periods due to overconfidence, and finally, they got burned.

This is why it is so essential to govern yourself accordingly and take the market seriously. Following these nine short term forex trading tips and tricks, you will have reliable tools to become not only a trader but a successful and profitable one.

At the end of the day, it all depends on you and how you deal with yourself. Keep your trading in shape with regular study, research, and testing. And win big!

Short-term Forex Trading FAQs

What is the Easiest Forex Strategy?

The easiest forex strategy is the one that fits naturally with your trading skills. More people love support and resistance, but it is all about you and how you like to trade.

What is the Most Profitable Forex Strategy?

That depends. All forex techniques are profitable, and potentially the most profitable forex strategy can be whichever. The secret is that you trade what you feel and fit with your trading skills and style. The money will come naturally.

How Can I Get Better at Forex Trading?

The answer is one: training. Forex evolves every day, so to get better at forex trading you should keep studying, learning new things, and testing different strategies. And finally, trade what you see, not what you hope to see.

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Broker news

Donald Trump blasts ‘fools’ who oppose good Russian ties

US President-elect Donald Trump has posted a progression of tweets censuring the individuals who contradict great relations with Russia as “‘dumb’ individuals, or nitwits”.

Mr Trump promised to work with Russia “to comprehend a portion of the numerous… squeezing issues and issues of the WORLD!”

His remarks came after an insight report said Russia’s leader had attempted to help a Trump race triumph.

Mr Trump said Democrats were to be faulted for “gross carelessness” in permitting their servers to be hacked.

In a progression of tweets on Saturday, Mr Trump said that having a decent association with Russia was “no terrible thing” and that “lone “idiotic” individuals, or simpletons, would believe that it is awful!”

He included that Russia would regard the US increasingly when he was president

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Broker news

Bulls and Bears Took on More Currency Exposure in Week Through January

he most striking improvement among theoretical situating toward the finish of a year ago and the primary session of 2017 is not that modification were little. There was just a single gross theoretical position modification of more than 10k contracts. With sterling apparently not able to maintain even humble upticks, the bears added 13.1k contracts to the gross short position, lifting it to 120.2k contracts.

Or maybe, it is eminent that examiners for the most part added to positions, long and short, as opposed to close positions at the very end of the year. Examiners added to net long outside cash prospects positions, aside from in the Japanese yen and Swiss franc where 2.6k and 2.5k contracts were exchanged separately. Examiners likewise added to gross short positions. Here there was just a single exemption, the Japanese yen. Despite the fact that the dollar shut comprehensively higher in front of the end of the week, every one of the monetary forms we track here, spare the Mexican peso, picked up against the dollar in the three sessions since the finish of the CFTC reporting period.

Every once in a while it is helpful to review why many market members take a gander at the theoretical situating in the cash fates advertise. It is not that the outside trade is essentially a prospects showcase. It is principally an over-the-counter market in which every day turnover midpoints in abundance of $5 trillion a day.

Trade exchanged monetary forms and alternatives represented around 3% of the normal day by day turnover as indicated by the BIS study. Be that as it may, past reviews have discovered some contemporaneous connection between’s market heading and net position changes. We think it additionally offers knowledge into a specific market section of pattern supporters and energy brokers. It is not by any means the only device, yet one of a few data sources.

One ramifications of this is albeit theoretical positions in the money fates market are moderately extensive, it is still little contrasted and the money showcase. Along these lines, it is difficult to see the genuine essentialness of a record vast position, as though there is some market top. At some point, examiners are not driving the costs, possibly there is another fragment, national banks, enterprises, as well as genuine cash that is more essential at any given minute.

We invest some energy taking a gander at gross positions instead of just net theoretical positions, which is the more customary approach. We think a more granular look is frequently fundamental. There is a distinction between short-covering, for instance, and new purchasing, however it appears to be identical in the net. Additionally, the gross position is the place the introduction is not the net position. A net position of zero does not mean the market is nonpartisan. Net positions could be huge, which implies a short press or a negative stun could in any case troublesome. The positions that must be balanced are captured in the gross measure not the net figure.

We find numerous customers are likewise keen on theoretical situating in the US Treasuries and oil. The net and gross short theoretical Treasury position has swelled to new records. The bears added 23.8k contracts to the as of now record net short position, lifting it to 616.2k contracts. The bulls attempted to pick a base and added about 20k contracts to the gross long position, which now remains at 471.2k contracts. These modification prompted to a 3.8k contract increment in the net short position to 344.9k contracts.

The bulls delayed in the oil prospects toward the finish of 2016. They exchanged short of what one thousand contracts, leaving 608.1k gross in length contracts. The bears added 4.1k contracts to the gross short position, giving them 168k. These conformities trimmed the net long position by very nearly 5k contracts to 440.1k.

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Broker news

3 ways to profit in the ‘year of the dollar’

In December, the Federal Reserve raised loan fees for the second time since the Great Recession and included the desire of a 2017 financing cost climb to its gauge. Furthermore, only a couple days prior, the abundantly anticipated minutes from the most recent Fed meeting demonstrated the most hawkish tone from the national bank in two years.

In the meantime, Europe has been dove into political turmoil after a year ago’s Brexit vote and the later abdication of Italy’s leader. Somewhere else, the Bank of Japan proceeds down the way of negative rates and forceful security purchasing.

Put it all together, and it isn’t astounding that the U.S. Dollar Index is up against 14-year highs.

Speculators may have missed so much discussion on account of babble about the Dow Jones Industrial Average at the end of the day almost hitting 20,000. Be that as it may, paying little respect to your assignment to stocks or your venture skyline, this sort of huge picture incline in the dollar implies right now is an ideal opportunity to position your portfolio to benefit and, maybe most critical, to keep away from a portion of the pitfalls that can originate from a solid local cash.

Here are a couple ideas dollar exchanges ought to consider:

Residential plays over multinationals

There’s a considerable measure of seek after shopper stocks in 2017 on account of an enhancing work market and any desires for a jolt under a GOP-controlled Congress and President Donald Trump. In any case, remember that not all retailers are made equivalent especially those with abroad operations that are adversely affected by the wide dissimilarity in monetary standards at this moment.

For example, retailer Wal-Mart Stores Inc.(WMT) said troublesome money trade rates shaved very nearly 2.5% off profit for each partake in the second quarter of 2016. On the other hand consider that in the monetary final quarter of 2016, athletic attire goliath Nike Inc.(NKE) saw its income development cut down the middle because of forex weights, from 12% year-over-year in consistent cash measures to only 6% including real money changes.

To take advantage of the “reflation” exchange that numerous financial specialists are counts on in 2017, you need to represent the headwinds that a solid dollar are making for multinationals at this moment. The most ideal approach to do that is to consider customer plays that do by far most of their business here in the U.S. – for example, Foot Locker Inc.(FL), which has been an uncommon splendid spot in retail throughout the most recent couple of years.

Supported money ETFs

Obviously, in the event that you need a steady portfolio, you can’t just purchase just local centered values. Geographic expansion is similarly as imperative as enhancement crosswise over parts and resource classes. Such a large number of financial specialists keep on holding worldwide plays in light of a legitimate concern for a balanced portfolio, regardless of the possibility that it implies battling a daunting struggle as a result of a solid dollar.

The uplifting news, notwithstanding, is that you don’t need to leave yourself to torment through a solid dollar and a powerless euro when you put resources into Europe. Nor do you need to stress over the yen-dollar conversion standard when you put resources into Japan. That is on account of there’s an entire group of cash supported ETFs to permit financial specialists to put their cash in outside business sectors yet keep away from forex issues.

Consider that Japan’s Nikkei 225 file is up around 25% from its July 2016 lows. The WisdomTree Japan Hedged Equity Fund(DXJ) is up 35% in a similar period on account of assurance from forex issues and a somewhat better-performing rundown of stocks – while the non-supported iShares MSCI Japan ETF(EWJ) is up only 10% in a similar period because of battling a difficult task against a solid dollar.

In the event that you need to differentiate your portfolio comprehensively, you ought to consider supported assets that incorporate the Japan-centered DXJ, the WisdomTree Europe Hedged Equity Fund(HEDJ) to play Europe or the iShares money Hedged MSCI EAFE ETF (HEFA) for developing markets.

Dollar list ETF

In the event that you are searching for an immediate play on a rising dollar as opposed to putting resources into stocks, figuring out how to exchange remote trade can appear like an overwhelming undertaking. Gratefully, there’s the PowerShares DB US Dollar Index Bullish Fund(UUP).

This ETF is attached to the U.S. Dollar Index, which is a measure of the greenback against a wicker container of other worldwide monetary standards including the yen and the euro. It’s a straight money play, however that doesn’t make it straightforward or hazard free. In the event that the dollar debilitates, you’ll lose cash similarly as though you’re putting resources into a stock that has fallen on difficult circumstances. Furthermore, obviously, PowerShares takes a little cut of your speculations en route that indicates 0.8% yearly, or $80 a year on each $10,000 contributed.

Still, in the event that you need to conjecture on the dollar or support against a solid U.S. cash keeping down other worldwide ventures on your rundown, it’s maybe the least demanding approach to do as such for generally financial specialists.

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