How to trade effectively in Forex Market

Trading in forex market is an art. The key is to anticipate the forex signals. There are equal probabilities of profits and losses in the forex exchange. If the trader follows some strategy, the probability of forecasting forex trading signals and going of the trade in the favor is more than going against the trader. Thus it is always advisable that the trader follows some strategy and that the strategy should be proper. At present there is no strategy which is 100 percent correct. But there are some strategies which give a high chance of gaining profits against the chances of losing the trade.

In forex trading, the trader trade on various currency pairs and their relative prices of various pairs. All the major currency pairs are listed on the forex exchange. Based on the principles of demand and supply the prices of various currency pair changes. There are many forex strategies which can be followed. One of the prominent strategies which can be followed is:

Gap strategy: In the gap strategy first of all, the gap is identified. The gap is the difference between last day’s end of day price and next day market’s open price. The gap can be positive and negative and can also be small or large. Based on different gaps type the different buy and sell signals are initiated. Also various types of breakout strategy are associated with the gap strategy. It is one of the most studied and most followed strategies.

Like Gap strategy there are other strategies as well, for the intraday as well as short term traders. Also it is advised that the trader should always trade with the help of stop loss. By trading with the help of stop loss the trader is prevented from heavy losses. Thus if the stop loss gets triggered the trader gets exited from the trade by incurring a minimum loss.