To trade Forex successfully, a trader needs to choose a trading style that will be fully consistent with his character and temperament. This article will talk about the most popular types of trading strategies.
Intraday trading
The work of day traders is based on the analysis of several indicators at set small timeframes. The main disadvantages of this technique:
- the trader carries out only a few deals a day;
- intraday trading is based on analysis of charts, so a lot of time should be devoted to theory;
- entry and exit orders are made during several hours – positions should not be left open overnight;
- day trading is characterized by overtrading and trading in retaliation, so this type of strategy requires from the currency seller strong endurance and steady psyche.
Swing Trading
Swing trading differs from intraday trading in the number of performed deals. In this case, a trader sets long timeframes – from 4-hour and daily to weekly timeframes. The technique is based on fixing the price fluctuations, which allows the trader to “ride” the trend for a long time. Holding a position for days and even weeks is a distinctive feature of swing trading. That’s why this style is chosen by traders with a truly angelic patience who can wait for a signal to appear 24 hours a day.
Scalping
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Scalpers have really iron endurance compared to other traders because they make dozens of deals during one trading session. In this case, it takes from several seconds to several minutes for one operation. Only stable people who are able to concentrate at a crucial moment can deal with scalping. The main advantages of fast trading:
- the work will take a little time, because the transactions are carried out lightning-fast;
- opening a large number of transactions, which allows you to react less violently to unprofitable operations.
Automated (algorithmic) trading
Instead of traders all deals are performed by the automated program. The installation of expert advisors and special scripts allows the Forex businessman to earn a profit without actively participating in the management of transactions. The main disadvantage of such software is obligatory trader’s programming skills. But even if they are present, or a proven paid program is purchased, this does not mean that there will be no problems with charting.
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