Everybody has different needs and life styles and consequently, trading is not a one-size fits all business. Today I’m going to be talking about the different trading styles within Currency trading and how they may fit your life and investing requirements. I hope you find my currency trading tips practical.
Scalping
It is a trading method where traders let their positions last only a few seconds or minutes. The primary purpose of scalping is to produce small gains from the market when you risk your account to very limited risk, which is due to the fast open and close execution of the trades. This can be a good trading alternative if you have a very restricted amount of time and have found a broker with very low spreads. Scalping trading is the fastest type of trading there and it really should be approached with caution. The fast pace of scalping may occasionally leave room for errors.
Day Trading
Day trading is different from other styles of trading in that the positions are seldom held overnight and regularly closed in the end of the day. A Forex trader will take positions throughout the day and close all of their positions at a certain time at the end of the day (it is very similar to a 9 – 5 job where you have a clock in and clock out time). While day trading could possibly be the perfect solution for some Forex traders, it might not be for others. This trading style can become quite a time-consuming one so it might not be for people with time restraints.
Swing Trading
This is a style of Foreign currency trading that attempts to catch profits from one to many days. This trading style might be for you if you have a little amount of time to dedicate to Forex trading. As I mentioned before, positions are normally held from hours to days and it needs a very little amount of monitoring time.
Swing trading is usually traded in higher time frames (4 hour or daily charts) and due to this the signals produced by an efficient trading system are more profitable and are usually the perfect ones to trade.
Position Trading
It is a long-term trading style where a trader holds his/her trades for several days, months, or even years. This trading style requires many times a lot of capital in order to be profitable since it is the slowest tone of all. Position trading uses higher time frames including daily, weekly, and monthly charts.
Trading the Forex effectively will only be achieved by creating the right balance between your trading plan and strategy. Additionally, you want to make sure you pick the type of trading that better fits your trading time allowance and investment requirements. Stay tuned to get more currency trading tips.
Sincerely,
Jay Molina,
Pro Fx trader & Educator