3 top trading styles
Forex is a single word composed of two terminologies that are “foreign currency” and “exchange.” Thus, Forex is the world’s largest currency exchange and trading market that is on a constant rise in volume and turnover.
According to the Bank for International Settlements (2019 triennial report), the daily trading volume of April 2019 for Forex went over $6.6 trillion USD. However, with the profitable prospects and the ease of handling capital/investments, many new traders decide to take part in Forex trading every day.
Yet, there aren’t many successful, at least not for a long time. For that reason, we have compiled a shortlist of the 3 top trading styles to help you get on track with your Forex plans.
Top 3 forex trading styles
1. Position trading style
If you have heard about long-term investors, then you should probably maintain a similar idea regarding position traders. It is not for the faint-hearted because often, people will panic after seeing a few ticks fluctuate.
On the other hand, position trading offers some long and disciplinary trading opportunities that can fluctuate over thousands of ticks (losses or profits). Position trading can last for a few days or even several years. It depicts the quality of discipline and patience in traders.
Due to the time factor that position trading encompasses, it is possible for a single position trade to hold through both bearish and bullish markets. Often, even when there are uncertain economic factors (apart from a position trader’s own experience and knowledge), position trades may still hold for a long time, sometimes, years.
2. Day trading style
As the name suggests, day trading occurs during the daytime, so a day trader rarely ever leaves trade position open overnight when the market is closed. Day traders prefer engaging in trades in two different ways. One, they might engage in scalping, which is the opening of trade positions for short periods, sometimes even a few minutes.
Most often, day trading lasts an entire day, and the trade positions close before the market does. It is usually fine for people who prefer to sway with short fluctuations and are less disciplined in their early years of Forex trading.
Day trading style is suitable for people who like to make frequent short trades in a single day. Often, day traders wait for the best trading conditions throughout a day to make a single yet profitable trade. Although it may sound pleasant and easy for first-time traders, it requires knowledge and a little sense of discipline.
Prominently, making a few successful short trades within a day can cause the novice traders to lose all their profits or even their trading capitals over dangerous trades. Therefore, if you have a jumpy or compulsive decision-making attitude, then you should consider going through a few fundamentals of day trading on Forex.
3. Scalping trade style
Scalping is also a short-term trading style similar to day trading. Nevertheless, it goes even short-term, ranging between a few hours and a few minutes in the open trade position on the Forex market. In simple terms, it is the method of entering potentially profitable trades and quickly exiting them when you skim minute profits over a huge number of trades.
Scalping involves small trades that considerably makeup nearly the moderate profits that one large trade might offer. It is a form of spreading risk, and managing all the small trades at once is never too easy.
In reality, it requires prompt decision-making and might not leave enough room for long-term thinking and planning. Often, you have to set stop losses that compel you to withdraw trades even if there is potential for profit in the long run.
It requires immense discipline that helps in avoiding short-term losses. It is necessary to exit once the target profits are under your wing. Moreover, hitting stop losses (a certain loss level) also compels you to withdraw. Thus, if you are a loss-chaser, then it might not be suitable because, in order to retrieve short gains, you might lose more.
Conclusion
For novice traders, adapting a specific trading style might be difficult. In fact, many of them struggle due to a lack of proper knowledge, experience, and techniques. Despite this, there are significant chances of success in Forex trading by adopting one of the trading styles above.
Conclusively, with a trading style, you can achieve consistency, quality knowledge, and experience to induce profitability while also encompassing fine quality traits.
