Currency Trading Strategies: Make Money With Forex Trading

If you want to make money with forex trading, you will know that of course you are going to need some good currency trading strategies. Foreign exchange trading is like anything else in this world. If you want to do it well, you need some training and some practice. And if you are going to get into this activity you better do it well otherwise you could lose your shirt.

Getting the practice is easy enough because most forex brokers will let you open a free demo account. In fact they encourage it, because they are hoping that once you are making money with your forex demo account you will go ahead and invest some money with them. Then they can profit from the spread or the fees that they charge on your account. Hopefully you will make enough money to pay the broker and then some, so everybody benefits.

Finding profitable currency trading strategies is a little harder. There are plenty of systems out there, but some are very complicated for the beginner. What you probably want is something very simple so that you can start trading with your demo account today. Notice that I said “with your demo account”.

So let’s take a look at a simple forex trading strategy using what is called support and resistance. You can put this technique into action when you have a situation where the market is fluctuating up and down within certain boundaries. So if you look over a long period it is within an upper position and a lower position.

You can see this on the charts that you will be able to access in your demo account. Look at the candlestick chart over a large number of time periods. You can probably identify a time when the price was moving up and down between certain points.

You could draw a line along the top points. This line is called the resistance line and it will be horizontal. When the price hits this line it moves down again to keep within the boundaries. So at that point you could sell the currency pair.

Similarly if you draw a horizontal line along the bottom points this is called the support line. When the price hits this line it moves up again, so you could buy at that point.

If you try this in your demo account on live prices you will find that sometimes the price does not bounce back into the zone and on those occasions you will lose. Usually this is because a trend was beginning to form. You can use the indicators in your charting software to check when a breakout like this might be expected. From this you can develop your own system based on support and resistance on the one hand and following new trends on the other.

Be sure that your system is working profitably over a long time (several months) before you start using it to trade with real money. Forex trading is always risky but by testing your system in this way you can be more confident that you have created a profitable system from your currency trading strategies.