Forex Trading Short term strategy

Short-term Forex trading strategy:

1> Trade only the most liquid forex currency pairs, such as EUR/USD, GBP/USD, USD/JPY The most liquid pairs have the tightest trading spreads and fewer sudden price jumps.

2> Trade forex only during times of peak liquidity and market interest. Consistent liquidity and fluid market interest are essential to short-term trading strategies. Market liquidity is deepest during the European session when Asian and North American trading centers overlap with European time zones — about 2 a.m. to noon Eastern time (ET). Trading in other sessions can leave you with far fewer and less predictable short-term price movements to take advantage of.

3> Focus your forex trading on only one pair at a time. If you’re aiming to capture second-by-second or minute-by-minute price movements, you’ll need to fully concentrate on one pair at a time. It’ll also improve your feel for the pair if that pair is all you’re watching.

4> Preset your default trade size so you don’t have to keep specifying it on each deal.

5> Adjust your risk and reward expectations

to reflect the dealing spread of the currency pair you’re trading. With 2- to 5-pip spreads on most major pairs, you probably need to capture 3 to 10 pips per trade to offset losses if the market moves against you.

6> Avoid trading around forex data releases.

Carrying a shortterm position into a data release is very risky because prices can gap sharply after the release, blowing a shortterm strategy out of the water. Markets are also prone to quick price adjustments in the 15 to 30 minutes ahead of major data releases as nearby orders are triggered. This can lead to a quick shift against your position that may not be resolved before the data comes out.