5 Online Forex Trading Strategies

Our 5 online forex trading strategies can help you get to grips with the world of trading online on the foreign exchange market. If you have chosen your currency pair and checked the unit risk of each currency, what tactics can you use to get the most out of forex trading?

Top of our online forex trading strategies is hedging. Many traders hedge any exposure they have on foreign currency in order to maximise the potential profits from investments. For example, if you held US stocks but did not want to be exposed to movements in the US dollar, you could hedge against the movements of the US dollar. This is one of the most popular of the online forex trading strategies as it means you can benefit from buying goods or services abroad without losing out due to fluctuations in that country’s currency.

The next of our online forex trading strategies is speculating. This term refers to a wide range of activity that takes place on the foreign exchange market. Speculating involves buying or selling a financial asset, based on predictions of that asset rising or falling in value during a period of time. In the currency market, this means deciding that one currency will be worth more of another currency in the near future, and exchanging a currency pair based on this belief.

One of our other online forex trading strategies is arbitrage trading. When this is used as one of your online forex trading strategies, arbitrage trading involves simultaneously buying and selling a currency at slightly different prices, with the intention to make a small, fast and relatively risk-free profit. It is worth pointing out that opportunities for arbitrage trading tend to be quite rare.

You may have heard of the carry trade before. This is also one of our online forex trading strategies. Carry trade involves selling a currency of a country that has low interest rates and using the money generated from that sale to purchase the currency of a country with high interest rates. It is worth noting that during times of high market volatility, this is not a desirable tactic.

The final strategy on our list of online forex trading strategies is the macro-level strategy. As currencies are affected by so many different factors, from employment rates to interest rates and political stability, there are a lot of factors you can use to bet on certain currencies. For example, if the latest employment statistics are due to be released in a certain country, you could predict what these statistics will reveal and what the consequence of that would be on the currency.

Online forex trading strategies can help you make the most of the opportunities available from the world’s currencies. The foreign exchange market certainly poses risks, but traders who pick their strategy carefully stand a better chance of making profits.

Risk warning: Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment. 

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