While political tensions have shone a light on the future of the HKD/USD currency peg, it hasn’t stopped Hong Kong from remaining one of the world’s leading forex markets.
The territory is currently the fourth largest for global trade execution in the forex market and the world’s largest Renminbi forex market. There are plenty of opportunities for intelligent traders to maximise their returns on the Hong Kong markets.
How Do You Make a Success of Forex Trading?
There are many different strategies successful forex traders employ. Various variables will impact your trading returns, but in general, the more information you have at hand, the better the decisions you make.
Different strategies can be employed, all with a range of advantages and risks. While it’s often presumed you only make money on rising markets, shorting a currency market allows you to profit from a fall. In fact, there is a range of strategies that deliver returns when executed successfully.
Here are four strategies commonly used for successful global trade execution on the Hong Kong forex markets.
Breakout Trading
Breakout traders maximise their profits by successfully following trends and then identifying when trends are coming to an end. This is when the price then moves from a range it had previously inhabited. If you’re able to spot when this is likely to happen, there are real opportunities to make a profit. It takes real skill, building up knowledge of how trends play out, and the signals indicate that a trend might be about to end.
Return to The Mean
Another strategy is the return to mean approach to global trade execution on the forex market. If a currency price struggles to break away from a range, it will usually return to its average. This is sometimes known as a “retest”.
Forex traders can profit from the difference between the current price and the average price over a set period of time. They do this by buying at the average price and then selling during a price spike. This process can be repeated until the price finally breaks away from its recent range.
Retracement
Retracement is when a directional trend is suddenly reversed. This is usually temporary and can be very short-lived.
Quick and substantial profits can be made if you’re able to spot a short term retracement and then purchase during the dip. You would then sell when the price resumes its directional trend upwards to a point where a profit can be taken.
The skill lies in identifying a short term reverse from a more substantial and longer-lived downward trend.
Carry Trading
Carry trading is a more sophisticated strategy when it comes to forex global trade execution. By holding a currency overnight, or perhaps longer, you will then accrue the interest rate of that particular currency. Carry trading is when you sell a currency with a higher rate to buy a lower one, profiting from the differences in currency exchange rates.
Do Your Research
Whichever strategy or combination of strategies you decide to employ, the key to successful forex trading in Hong Kong markets is research. The strength and depth of your knowledge base and your ability to act decisively on that knowledge will determine how successful you’ll ultimately be.
GIS HK provides cost-effective, Hong Kong-based, global clearing, trade execution and safe custody services. Call +852 3018 3009 or email [email protected] to find out more.