Trying to pinpoint what Forex trading strategy works best for you can be rather daunting. Is it best to combine different strategies, or should you embrace a specific approach to obtain fruitful results? Well, today’s post should shed some light on this topic. We asked the expert analyst of Forex Trading to tell us what strategies are most likely to work the way we expect them to. Keep reading if you want to know more.
Swing trading is referred to as a medium-term strategy, as you keep the trades for days or weeks. The key concept here is to capture a single move – known as a swing, in the market. But you should factor in the overnight risk, not to mention that you don’t have the option of riding big trends.
Also known as a long-term strategy, position training entails keeping your trades for weeks or months. In this position, you depend on fundamental analysis in your trading. Aside from that, you might consider utilising technical analysis to get a better hold on things. But for this approach to work, you should have an extensive understanding of the fundamentals that conduct the market. Plus, you’ll need a larger capital as the stop loss can be wide.
For the most part, we could say that day trading works best as a short-term strategy. What you should do is hold on to the trades for hours or minutes, depending on what works best for your given circumstances. But what is your main concern as a day trader?
Your focus should be on capturing the intraday volatility. What does this imply? Trading the most volatile session, because this is how you can really maximise your gains. As a day trader, you needn’t worry about the implications of economic fundamentals, or long-term effects, because these don’t concern you.
On the opposite side, you ought to pinpoint your bias for the day and trade in that direction. The thing is that, this approach can be rather stressful, as it requires you to constantly keep an eye out on the market. Plus, if you suffer massive slippage, you might lose more than you anticipated.
The main concept behind transition trading is to trade on the lower timeframe, when the market changes in your favour. If you were to do this, then, you could seriously maximise your profit whilst trailing your stop loss.
Still, in order for this strategy to work, you should thoroughly comprehend distinct timeframes. In addition, only a limited range of trades could trigger notable winners. On the flipside, though, you may get an impressive risk to reward.
In essence, scalping is a short-term strategy, which entails holding trades for minutes, or even less. This approach gives you an array of trading opportunities on a daily basis, allowing you to make a considerable income out of trading.
Nonetheless, the evident drawback is the significant cost – which is due to the use of software, newsfeed, and etcetera. Not to mention that it can be quite stressful.
The realm of Forex trading is definitely complex. If you want to expand your comprehension on the topic, you might consider Engine Forex. That being said, which strategy appeals to you the most?