Beginner's Guide to Forex Trading
There are many approaches for trading Forex. However, the most widely used are just four, and they are:
Swing Trading, and
Scalping is the fastest of them. It is a high-frequency trading strategy that seeks to profit from multiple trades taken within a short time. Scalpers enter and exit the market at a high speed, scraping few pips per trade. Before you scalp, you must use a broker that makes special provisions for it. For example, the execution speed of such a broker must be ultra-fast and since you will have to be placing many trades within a short trading window, its transaction costs must be low.
Day Trading is the most popular of Forex trading strategies. In fact, it is the most recognised and the most practised. And most Forex traders into its category. The whole idea of day trading is to enter and close your trades in a day. Forex day traders never keep their positions till the following day. Instead, they buy and sell within the day. As a Forex day trader, it is better you stick to combine both the lower and some of the higher time frames.
Swing Trading is, perhaps, the easiest next to position trading. However, it works poorly in ranging or sideways markets. As a result, swing traders concentrate on trends. They seek to enter the market when an old trend is breaking and another one is beginning to establish itself. That stage is often characterised by unusual market volatility which swing traders then seek out to capture. Because trends can be long-term, swing traders tend to hold their positions for more than a day.
Finally, there is position trading, a relatively safe and long-term strategy for trading Forex (forex trading strategies). Position traders are almost investors: they hold their Forex positions for a long time with the expectation that it will appreciate in value. Position traders seek to capture as many as possible market moves that will translate into greater profitability for them. As a result, they do no concern themselves with short-term price fluctuations and their holding periods can be from months to years.
At this point, you might be wondering which of the Forex investing strategy is the best for you. However, there is no clear-cut answer. Instead, what you have to do is to assess your situation, personality, and goals so that you can find the best for you.