Different Forex Trading Strategies that Work

With the ease and accessibility of trading in the forex market, more and more people get attracted into this venture. Unlike before, forex is now made more open to everyone who wants to invest and earn in this market. You can even start trading from scratch and grow your money to earn more profit. However, if you’re new to forex, it can get confusing which type of trading strategy fits your trading style especially if you’ve already failed a few times. No need to worry now because here are some trading strategies that are proven to work. You can also learn more about its pros and cons so you can find which one suit you best.

Position Trading

This type of trading strategy is a long-term approach. Here you get to hold your trades for weeks and even months. When you’re a position trader, you need to focus on the fundamental analysis of your trading and use technical analysis to know the right timing to make a trade. The advantage of this approach is that you spend lesser time in trading because of the long-term approach you’re taking. Also, there’s no need to worry about short-term price fluctuations. However, you must have a full knowledge and understanding about the fundamentals of forex and the driving forces that influence the market. You may also need larger capital to invest in a long term trade and only make a few trades in a year.

Swing Trading

In swing trading, you get to hold our trade for a few days or weeks. It is shorter compared to position trading and the usual trading timeframes for this approach is 1 or 4-hour. Swing traders focus on catching a single move in the market. Swing traders don’t have to focus their whole time on trading yet they can make more profits due to more trading opportunities in a year. However, big trends won’t be an opportunity for you plus an overnight risk.

Day Trading

Just like swing trading, day trading is also a short-term trading approach but much faster. In day trading, you get to hold your trade for a few minutes or hours. Day traders capture the most volatile session in a day and make a trade to earn money. Day trading is good if you have plenty of time to spend watching the constant changes in the market. Since you close all your trades within a day, there’s no need to worry about overnight risk. Good day traders can make a lot of money on certain months.

Scalping

Scalping is probably the fastest among the previous strategies. You hold the trade for seconds or minutes and focus on taking advantage with the present market situation. Foreign exchange trading companies don’t recommend scalping to retail traders because of the high cost it takes. If you’re a good trader, you can actually make a decent income by scalping since there are so many opportunities for you in a day. However, you need to spend most of your time checking the current market situation.

Plenty of traders have wasted a significant amount of money because they haven’t discovered early on which strategy suits them. Before trading, make sure you already have an idea what strategy to use to avoid losing a lot.