A CFD trading strategy refers to a specific system that traders follow to buy and sell currencies. Based on the type of analysis (technical or fundamental), the systems may differ from one another. A better trading strategy will help a CFD trader in the Mena region analyze the market correctly. Therefore, the situation can be more comfortable for him to enter a trade or to sell the currency.
Top CFD trading strategies
CFD trading strategies are developed considering a few factors including, the timeframe, frequency of entering a trade, and amount of risks willing to take. There are a few plans that are quite favorable to newbies, and some of the plans are only for the experts. Here, we will reveal the Forex trading strategies that can work best.
1. Price action trading style
This kind of plan involves the investigation of a few historical prices as well as the records so that a trader can choose technical indicators carefully. It is often regarded as the stan-alone plan, but one can utilize it in combining it with other technical tools. Fundamental analysis is hardly used in this trading style. Visit the official site of Saxo and to learn many new techniques, including the candlestick pattern trading method.
This trading style can be used for different periods, which may range from short-term, medium-term, or long-term trading. Many traders prefer using an average or medium timeframe with this system. To determine the resistance or support level, professionals advise using the following methods – candle wicks, indicators, Fibonacci retracement, oscillators, to name but a few.
2. Range trading plan
This trading plan includes determining the resistance and support level by which the investors can place their trades around those levels. If you notice that the market is in a consolidated condition, and there are no significant fluctuations, you can choose this trading plan. It is recommended that you use technical analysis while working with this style.
Managing and minimizing the risks is the most critical issue in this strategy, and the beginners can implement this plan in any timeframe. The best tool for this strategy is considered to be the oscillator, and the relative strength index as well as the stochastics, are the most popular oscillators. A beginner can find a favorable risk to reward ratio and can get several opportunities to enter trades.
3. Position trading plan
This is a long-term trading style. Investors have to concentrate mainly on several factors, which are considered as fundamental factors. However, a few technical processes like the Elliot Wave Theory can also be utilized. A beginner has to choose a higher timeframe for this method. Since the timeframe is higher, the investors have to retain the currency for several days, weeks, or months. To figure out the ideal exit and entry points, one can use the technical indicators as well.
The benefits of this strategy are that newbies can get a higher positive risk to reward ratio, and the process requires a minimum investment in terms of time. However, you won’t get several opportunities to enter trades.
4. Day trading strategy
This is another popular trading strategy in the CFD industry, and it works for short-term investors. These guys hold their purchased currency for a few hours or minutes, and they have to execute it within a day. This style is regarded as a high risk one for rookies. To figure out the ideal exit and entry points, they have to use technical indicators. Some of the best indicators for this plan are the simple or exponential moving average, moving average crossovers, moving average convergence divergence and momentum, along with some others.
This style can provide you with multiple chances to enter trades. Besides, the risk to reward ratio also stays in favor of the investors. However, the problem is, investors need to keep looking at the screen and the chart to make decisions fast. Sometimes they make wrong decisions because of it.