Forex Training Day - The Basics of Currency Trading

There are plenty of different tools that you can use to become a successful trader, but you are going to have to learn how to use them first. You many develop your own model or forex trading system after time, but you are still going to have to start out by using some of the more basic simple forex trading strategies that are available in the forex market. Remember to keep it simple and you will find that you make money more often than not in this market.

The first simple strategy that you should become familiar with is the simple moving average. When you are establishing this philosophy, you will want to keep the ratio of your risk and reward in line. In other words, you are not going to risk a large portion of your bankroll when the reward of the trade is minimal in relation to the risk factor. Initially, the trade may look great, but when you break it down you soon realize that you are putting up far too much money for what you are going to get back.

This forex strategy using simple moving can be implemented by establishing a point of the trade, say the 12 period SMA. When your currency pair goes above the line, it is time to buy and when it goes below the line, it is time to sell it off. The trader will always have a long and short position with this system and will always be in the market.

Another simple strategy that you can follow is support and resistance levels. In forex trading, the support position is the floor or the low point of the currency pair. In other words, it is supporting the trade to go to a higher level. I am sure that you have now quickly figured out that the resistance level is the ceiling or the high point of the trade at which it will head back down.

To comprehend this philosophy, assume that the EURUSD has shown time and again that when it gets to the level of 0.9015 you see that time after time it goes back down. It simply cannot get past this level. When you see this trend, 0.9015 is your established resistance level and when the currency either hits this point or gets close to it, you sell and reverse your position.