3 Most Used Forex Strategies

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There are various types of forex trading techniques that you can use in the world of currency trading. The one that you should take must depend on factors like the set of skills that you have and how active you will be as a trader.

It is really a good idea to just use one strategy especially if you are just a newbie. That way, you will be able to master that certain strategy before trying to learn a new one.

Listed below are the 3 most commonly used forex strategies.

Day Trading

This type will see you placing several orders through the day. The concept of overarching is that a position is never kept open when the market closes. In its place, day traders may keep a few hours or minutes for positions to remain open.

Swing Trading

While the day traders keep positions open for just a few hours and minutes, swing traders are more flexible. They may keep positions open for a few days or weeks, but hardly over 2-3 months.

The Key principles which the swing traders follow is that money must follow the trend so long as it remains in place. Meaning to say, if upward trajectory has been the trend of AUD/NZD for several weeks, then the wingtraders will search to keep open their buy position so long as the trend continues.

In the same way, if the trend is in a downward trajectory, say, EUR/USD, then the traders will capitalize by keeping their sell order until reversal  is possible. As for the beginners, it is easiest and simplest to master compared to day trading.

This is due to the reason that fundamental research plays  a bigger role, that it is so easy to comprehend than its counterpart, technical analysis.

Scalping Trading

Scalping trading is a very advanced form of trading, which in reality can take many years to completely master.  Basically, this forex trading style will seek to put hundreds of orders through the day to take advantage of super small shifts in prices.

While the margins offered are just a few minutes, they can add up very quickly. However, this is on the proviso that the scalping traders have more trades that are winning compared to the big ones.

The most beneficial condition of a market for scalpers is when a pair of currency sits with a grace of consolidation. In the scalper’s case, it is better when it is longer.

For instance, say EUR/CAD has been in a few days trading between 1.6505 and 1.6590. This implies that the pair has not gone over 1.6590 or lower than 1.6505. From a scalping trader’s point of view, they have the capability to make low-risk, quick and frequent earnings as long as the above mentioned period of consolidation  still remains in its place.

The moment you master scalping trading, you will learn that it’s actually a low-risk technique of entering the forex markets. This is due to the reason that you can put orders just below or above the known consolidation range in expectancy of a breakout.

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