KISHORE M FOREX PRESENTS FOREX TIPS
shore M forex Presents professional service provider .One question
beginning Forex day traders will face is: What’s your trading style?
Are you a position trader? Or do you consider yourself a scalper?
There are many different types of Forex styles, but in general, they
fall into four basic categories. Traders can consider themselves
scalpers, day traders, swing traders, or position traders.
Each of these styles will help Forex traders reach specific goals, and
each style has a different time commitment. So which one suits your
needs best?
If you’re just beginning in the Foreign Exchange Market, it’s
important to carefully consider the different types of Forex styles. It’s
not to say you can’t always change up your style, but it will help you
direct your focus as you’re just starting out. Here’s a look at the four
most common types of Forex trading styles:
Scalping
Scalping is a high-speed, quick-profit strategy that requires the
trader to open many positions throughout the day with the goal of
“scalping” tiny profits off the top of each trade. For example, scalpers
tend to open about 5 to 15 trades per day. And their goal is to score 5
to 10 pips of profit off of each trade.
This trading style requires a significant investment of time. The
trader must be highly focused on the charts during normal trading
hours, and they must be able to control their emotions in each trade.
Typically, these traders focus on major pairs with huge liquidity, like
EUR/USD, GBP/USD, or USD/JPY. The reason: These pairs have the
lowest spreads. Pairs with larger spreads can significantly cut into
the scalpers’ tiny profit margins.
Scalping is not all great though. One disadvantage of this that during
periods of high volatility, say following a major news announcement,
the markets can respond quickly. And quickly knock out the scalpers
small profits.
Day Trading
Day trading is similar to scalping in that the trader doesn’t keep
positions open overnight. Instead, day traders open 1 or a couple of
different trades throughout the day with the goal of scoring up to 50
pips of profit off of each trade. Some days, the trader may adjust their
pip-profit goals if the trend is strong, and others, they may have to
take smaller profits to avoid bigger losses.
Analysis is the day trader’s most important tool. Day traders combine
fundamental and technical analysis to quickly spot micro- and macro-
trends, and they enter trades based on this analysis. Typically, day
traders aren’t required to spend as much time looking at charts
throughout the day, but they do need to pay enough attention to the
markets to ensure they spot trends and trend reversals as they
happen.
Swing Trading
Swing trading occurs on a longer timeframe compared to day trading.
In the Forex market, currency pairs tend to fall into fairly specific
ranges, between high and low points. Swing traders follow these
trends closely, and when they determine an entry point, they
typically stay in a trade for up to a week, and in some cases, even
longer.
To be a successful swing trader, you must be patient. Sometimes, it
can look like the markets are turning against you, but in many cases,
the trend continues. Swing traders cannot let these slight
fluctuations deter their longer-term goals. Although swing traders
don’t need to stare at the charts throughout the day, it’s important to
stay up-to-day on important market news to avoid large fluctuations
and unexpected volatility.
Position Trading
Position trading is generally employed by portfolio investors. The
reason: Position trading happens over very long periods of time, from
months to years, leaving cash tied up in these trades. That’s not a
luxury many smaller scale investors can take.
Essentially, the position trader thoroughly analyzes current and
expected future market factors to determine long-term trends for
currency pairs. And because of these longer timeframes, this trading
style requires a greater investment of capital to avoid call orders
when fluctuations might turn against you. Kishore M forexPresents
certified service provider.