The difference between successful traders and failed traders is most clearly determined by the trading method. There is a saying: “If you keep following the old ways in the past, you will still get the same results in the future.” So, if you are a loss trader, you can refer to the forex investment methods of successful traders. Maybe it will change your mind and help you succeed.
In the forex market, traders often use the 5 most popular forex trading methods, including:
1. Forex Scalping Strategy
2. Day Trading
3. Swing Trading
4. Position Trading
5. High-Frequency Trading
Forex Scalping Strategy
Scalpers (Scalping traders) are traders who hold up to a few seconds to a few minutes. Their main goal is to get very small number of pips as many times as possible during a certain part of the day. Because the profit is small on any one trade, investors can place dozens or even hundreds of transactions per session; Therefore, it is imperative for investors to select brokers who provide accounts with low transaction commissions.
It is noted that Scalping trading is very risky because it depends on having a high winning rate and the average winning trade is often many times smaller than the average loss trade, it may take only one or two unprofitable trades to clear all your profits.
Day Traders are Day traders who choose to enter the order at the beginning of the day according to their judgment and then end the day with profit or loss. A day trader does not hold any positions overnight and all trades are closed at the end of the session by using profit taking, stop loss or exit orders at the time set (Example: Exit order at the end of the day). Daily traders often use technical analysis to find and exploit intraday price movements, view intraday price charts with minute-based chart intervals, mark volumes or intervals. on the chart.
Because trades are held for a few minutes to several hours, large price movements are uncommon, so everyday traders try to collect small margins regularly to build profits. To capitalize on their buying power, day-to-day traders often trade with margin. Day trading is a full-time job as positions must be monitored continuously.
Swing Traders are people who like to keep trading for days to weeks. In general, swing traders rely on technical analysis and price action to identify profitable entry and exit points, with little attention to the fundamentals. The trades are exited when the profit target, the stop loss or after a period of time initially has expired.
Because swing trading takes place from a few days to a few weeks (with an average of one to four days), this trading style doesn’t necessarily have to be continuous. Therefore, traders who are unable to track their position in each trading session are often drawn to this popular trading style.
Position Traders are those who have trades that last for several months or even years. Position traders can use a combination of technical and fundamental analysis to make trading decisions and often refer to weekly and monthly price charts when assessing the market. Usually, short-term price movements are ignored to support the identification and profitability of long-term trends.
This style of trading is most similar to investment. However, while buying and holding investments usually consist only of long trades (taking profits from a growing market), position traders can use both BUY and SELL orders.
High-Frequency Traders are traders who use complex algorithms (and often proprietary) to analyze multiple markets and execute orders based on market conditions. Because traders with the fastest execution speed are the most profitable independent traders, independent transactions are often not easily done at home simply cannot be completed. This trading method was mentioned in a book “Wall Street Rebellion” by Michael Lewis, focusing on the increase of HFT in the US stock market. The book emphasizes the need for speed by high-frequency traders and describes a $ 300 million cable project to connect the financial markets of Chicago and New York, which will eliminate 4 milliseconds in a single transaction. Translate. Currently this trading method is no longer popular.
Selecting the appropriate trading method
As a trader, you have to consider many different factors when determining the trading style that best suits you:
- Account size
- The amount of time that can be spent on transactions
- Trading experience
- Habits and personality
- Level of accepting risk
Each market participant will fit several trading methods. In general, it takes time and experience to find the most suitable trading style. Whichever style you choose, you have to make sure it really fits your personality.
Synthesized by top4forexbrokers.net