Forex Trading as an activity, income or investment opportunity is flourishing, with an increase in demand almost daily. However, the trading world involves a fair share of complexity which requires that traders establish an adequate trading plan and strategies.
There is a vast array of trading strategies and techniques which can be employed. Most techniques are considered more common, albeit classified as standard where others are more sophisticated, applying uncommon practices and unique techniques.
When considering this, depending on the trading style and trading needs and objectives of the trader, traders are always advised to thoroughly test their strategies before applying them in a live trading environment.
When applying trading strategies, it is necessary for traders to align them with their trading plan and to ensure that they accommodate their trading needs and objectives adequately.
What are the 10 uncommon Forex Trading Techniques worth exploring?
1. Trading News Sources
Trading according to news sources may be an uncommon practice due to its complexity as it involves reported consensus figures along with whisper numbers which can be defined as the unofficial and unpublished forecasts, along with previous reports.
It is imperative for traders to identify key news releases relevant to their trading along with relevancy towards the currency pair that they are trading or intend to trade.
When trading the news, traders need to identify the releases that they can expect along with knowing which data is important, including interest rates, inflation, and economic growth which can be subdivided into retail sales, manufacturing, and more.
2. Mass Behavior
This strategy is one of many that greatly considers the behavior of the general mass which employs a signal to either buy or sell a financial instrument depending on whether the demand for it increases or decreases as participants show interest in such.
The general principal surrounding this strategy involves selling the financial instrument should the demand increase and buying only when it decreases with the expectation that a trend will form, and that demand will increase again.
View the best ECN Forex Brokers
3. Price Action
This strategy describes the price movement of a financial instrument, or a currency pair which is often analyzed when prices are taken into consideration with such in the recent past.
In employing this technique, traders can read the market which enables them to make subjective trading decisions which are based on the most recent and actual price movements.
4. Trading Volume
The Forex Market is one of the largest and most liquid markets in the world and it relies greatly on volume to move from one price level to another. As result of this, the Forex Market is also the most volatile of all the markets due to such large movement.
When using this strategy, traders need to use a volume indicator which allows the trader to read volume in the Forex market and subsequently predict price movements on currency pairs based on the information provided.
5. Pivot Trading
When making use of this strategy, Forex traders are provided with potential support and resistance levels along with the advantage to minimize risks involved with trading Forex.
These pivot points indicate when the ideal time would be to enter the market, place stops, and take profits.
The pivot points used reflect a change in the market sentiment along with determining overall trends across a specific time interval with the focus on the important relationships that exist between high, low, and closing prices between trading days.
Pivot points are identified according to specific calculations that help the trader identify important resistance and resistance levels along with support and resistance levels.
The goal is for traders to look for prices that break through these support and resistance levels which signal new trends that may be developing and result in the chance for quick profits.
6. Trading Psychological Levels
There are key levels in Forex which tend to draw the attention of traders who are participating in the Forex Market. These psychological prices have a habit of tying into the human psyche and the way in which traders think.
These levels are market price levels that are often denoted by round numbers which often act as levels of support and/or resistance.
Due to the fundamental human disposition, humans are said to predominantly value simplicity and in trading terms, it involves valuing whole numbers and using them as entry, exit, or stop levels which can alter order flow as well as price changes.
7. ‘End of the day’ Trading
This strategy is often used by day traders who understand market reactions and allows them to benefit from the last movements made in the market closer to the time before the market closes for the day.
Closer to the time that the markets close at 5pm New York time, the Forex market is at its most volatile and a lot of traders can use this opportunity to harness the volatility by detecting specific behavior through studying the price action of the previous day.
This allows the trader to speculate on the price movement of the current day based on the trends of the previous trading day. This is, however, a very risky strategy that may lead to substantial losses if the trader speculates incorrectly.
8. Pattern Trading
Pattern trading relies greatly on the trader’s ability to read charts instead of applying specific indicators. When using this strategy, traders often use ‘necked’ charts which allows for them to read the price movement more accurately.
This results in a more accurate identification of the price movement’s behavior over a longer period, often over a few months or years.
9. Fool’s Trading
As one of the most uncommon trading strategies, this type of strategy does not involve the evaluation of trading data, but merely requires that the trader hold their current position for as long as possible in the hopes that another trader, or ‘bigger fool’ will buy the position.
10. Financial Astrology
This type of trading strategy depends on the belief that the financial marketplaces are influenced by planetary activities along with the lunar process.
In guessing the side effects associated with these, traders are guided by such movements in making trading decisions.
Final Thoughts
When considering these trading strategies including all others, it is apparent that traders cannot be guaranteed success in employing or continuously using them.
When entering the Forex Market with the intention of trading Forex, traders need to firstly ensure that they choose a reputable, reliable, and well-regulated broker by conducting extensive research and by comparing various brokers before choosing one.
Exploring the broker’s trading conditions, the trading platform offered along with the trading analysis and tools, amidst others is crucial, and trading strategies should first be thoroughly tested by making use of demo accounts provided by brokers.
