Forex trading use a number of strategies to trade currency pairs successfully. Ideally, you will choose the best forex trading strategy best to your personality, lifestyle and risk tolerance. The sections below describe the most popular forex trades strategies in order from the shortest to the longest time frame a trade is typically held for.
Scalping is a popular short-term trading style, used in the majority by technical analysis traders, discretionary traders or system forex traders. Day trading involves establishing and closing out all trading positions within the normal trading session chosen by a trader.
News trading involves trading around the time of a key news event, such as a major economic data release, and it generally does not involve taking overnight positions.
Forex Signals thrive on volatility. So they might establish forex positions just ahead of the news event and hold them through any movement that may result.
Alternately, the might establish a position just after a news release has come out to take advantage of the wide exchange rate swings that can occur it the result differs significantly from the market’s consensus.
Swing trading involves establishing and then closing out trading positions based on the momenturn of the underlying live currency pair forex signals, usually as determined by appropriate technical indicates.
Their trading signals focus is typically on near term exchange rate movements. With all positions closed out within from one to four days, so they do hold overnight positions.
Their preferred chart time periods for technical analysis are typically one hour and daily intervals, and they often watch for chart patterns to give them trade ideas. Since swing traders can profit both from trends and corrections, they can show a higher rate of return from their trading activities compared with trend traders.
Trend trading is a longer term trading strategy that often involves using technical analysis to identify if and in what direction a trend exits, and then determining suitable entry points. Take Positions Only In The Direction of Prevailing Exchange Rate Movements Or Trends
Trend traders generally take overnight positions – sometimes running a position for months until the trend concluders – and they will often use trailing stops to protect the profits on a winning trade. Also trend to prefer daily and weekly chart time periods for their technical analysis, and they often use longer term chart patterns and fundamental analysis to yield trade ideas. Trend traders are relatively insensitive to the dealing spread. So they can trade in relatively illiquid currency pairs.
Read more: Forex alerts