The Three Forex Trading Styles
There are various types of Forex trading strategies, and each strategy has its pros and cons. As a trader, you can decide which trading strategy best suits you. Let us delve into the various styles of forex trading strategies:
Scalping is a forex trading strategy where currencies are traded following real-time analysis. Traders make a quick deal to take advantages of small movements and gain small profits in the process. In other words, many trades are entered and exited very quickly.
- Positions are held for a brief period. Thus it is less likely that a reversal will happen.
- There is no need to know long-term analysis since positions are held for a short time, thus making it great for newcomers.
- A single trading loss can eliminate gains accumulated from other successful deals.
- The profits on each trade are smaller as it is less profitable than other trading strategies.
- Trade precision is required for this strategy.
This trading strategy involves holding your positions for much longer. It is one of the popular forms of forex trading strategies, and the gains here are usually more significant than others. It allows traders to benefit from both directional (buying or selling) movements of the market.
- Traders can take advantage of both directional movements of the market, thus increasing their chances of making profits.
- Trades are kept for a more extended period, which implies that traders don’t have to monitor their portfolio at all times.
- Swing traders have clear boundaries as they are more technically-inclined.
- The knowledge of technical and fundamental analysis is required before delving into swing-trading. Thus it is not ideal for new traders.
- Markets can change suddenly, and a swing trader might not be able to take advantage of sudden, short term moves.
Intraday is the most common strategy among forex traders. Also known as day trading, this strategy enables people to hold a position for a day or less, or sometimes up to a few days at a time. The intraday trading strategy allows traders to make more than one deal in a day.
- There are numerous trading strategies available for day traders to help them become consistent and intentional when trading.
- Day trading focuses on the quality of trades, not the quantity.
- There is no need to hold on to losing positions for an extended period of time as may happen with swing trades.
- There is no need to trade abruptly and miss out on larger profits as may happen with scalping.
- Day traders have to be patient as there may be days where there are no trading opportunities.
Intraday is the preferred trading strategy of ForexSignal.com. Our trades are usually in and out within the same day or few days and our primary objective to achieve 25-60 pips profit depending on our take/profit target. Over the past decade, we have posted all of our Forex trading results using intraday strategies and will continue to adopt trading strategies for our clients.