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Advanced Forex Trading Strategies

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Learning about forex trading tools and forex trading strategies in our online learning academy will help you maximize your profits and minimize your risk.

Price Charting Methods

Without the use of charts a trader cannot formulate or execute a viable forex trading strategy. The most used charts in the financial world are the Line, Bar and Candlestick charts. Learning how to use charts, understand the most common chart patterns and being able to make educated predictions, is an essential skill of forex trading for beginners.

The simplest form of price chart is the Line chart and fulfills a role in forex trading basics as it plots the price movement of a currency pair, a commodity or an index, over a selected period of time.

The Bar chart is slightly more complex than the Line chart and can be used for simple forex strategies. This chart plots the price movements of an asset with each vertical bar representing a specific period in time. The most common time frames are 1 minute, 5 minutes, 15 minutes, 30 minutes, 1 hour, 4 hours, 8 hours, 1 day, 1 week and one month. So a 1 day chart with sixty bars on it represents a period of 60 business days. Each bar indicates encompasses four pieces of important information. The top of the bar indicates the highest price of the period, the bottom of the bar indicates the lowest price of the period, the small horizontal bar on the left indicates the opening price of the period and the small horizontal bar on the right indicates the closing price of the period.

The Candlestick chart is the most popular chart for traders as they are essential for technical analysis use. As with the Bar chart each candlestick represents a period in time. If prices are rising, the top of the candles body indicates the closing price and the bottom of the body the opening price for the period. The top of the candles wick indicates the highest price for the period and the bottom of the candles tail indicates the lowest price of the period. Rising prices are represented by a green candlestick and falling prices by a red candlestick. The price indicators for falling prices are opposite from those of rising prices. Candlestick charts are ideal to develop and execute forex trading strategies or commodity trading strategies using technical analysis tools.

Our forex trading guides which are found under the forex articles and forex school areas of the UFXMarkets web site will develop your knowledge of price charts and technical analysis tools so that you will be able to comfortably interpret candlestick price chart patterns and technical analysis tools.

Some Advanced Trading Strategies

A forex strategy which is considered one of the most important to implement is called hedging. When you take actions to protect your open forex, commodity or index positions from any adverse moves in price which could undermine a potentially profitable position you are hedging. If for example you have a long position in anticipation of rising prices you run the risk of prices falling and making a loss, or, if you have a short position because you are anticipating prices to fall, you run the risk of prices rising and losing money. Hedging can reduce the risk significantly. There are many tools and ways to hedge a position, however, the most popular tools are using spot contracts or option contracts. Your personal trading coach can teach you how to conduct hedging strategies.

Position Trading
Position trading is very popular with long term traders because you don’t have to keep a really close eye on the market as you would if you were a short term or day trader. Trading long term means that you can hold a position for days, weeks or months and as long as you do your technical and fundamental analysis well using our daily, weekly and monthly reviews and advanced charting, you will profit from the potential of position trading.

Formulating Advanced Trading Strategies
Trading any asset is about market sentiment or market psychology. If you understand how to interpret these factors using fundamental and technical analysis and formulate a trading strategy that takes these factors into account you will become a successful trader. Always bear in mind that your open position (currency, commodity or stock) is only worth what the market is actually willing to pay for it.

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