When you are new to Forex Trading, you can feel overwhelmed by all the available strategies. It can be difficult to choose or to create a trading strategy that meets your needs and lifestyle. In this article I will give you an overview of the three main trading styles. For each style I will point out the benefits and disadvantages.
#Trading Style 1: Swing Trading
Swing Trading means that you trade on a long term basis. You enter a position that will be open for several days or even weeks. The advantage of this trading style is that you have little to no work. It involves more or less the following steps:
You verify the setup conditions of the trading strategy of your choice.You enter the trade at the moment that the criteria are met.You monitor the trade on a regular basis. The interval is defined in your trading strategy and it is related to the timeframe of your chart.Example:If you use a 1D chart, you will check your open trades every day, ideally at the moment of the closing time of the candle stick.You close the position when the closing conditions are met. The position will close automatically when it reaches your stop loss.It is obvious that there are a lot of tools that help you to perform some tasks automatically.
The main disadvantage is that your positions involve more risk as the trend can reverse while you sleep for instance.
#Trading Style 2: Intraday Trading
The aim of Intraday Trading is to open and close the trade on the same day. The profit per trade is less than with Swing Trading but there is less exposure to risk. The great advantage is that there is a fair balance between risk and profit. This trading style often results in good profits such as 50 to 80 pips. Furthermore the risk is reduced as you close the position on the same day. As a consequence, your trades will be less affected by turning trends. The main disadvantage is that you have to monitor your trades more often, at least two or three times a day. This depends on your trading strategy.
#Trading Style 3: Scalping
Scalping is a short term trading style. Your positions typically close within an hour or even minutes. The great advantage is that these trading methods offer many entry point per day. When you work with scalping, you sit in front of the screen all the time, because you have to react quickly on the changing market conditions. When you accumulate all trades you perform successfully, you will generate a nice income.
On the other hand, scalping is not for everyone, because you have to be able to act quickly but with a calm and disciplined mind. In my previous article, I gave some tips and advices to train yourself to get focused and calm mind.
Trading is like driving a car. When you know how to do is, it's child's play. It is a natural set of actions. But, when you have not learned how to drive properly, it can become dangerous. The same applies to forex trading. This is why I started a forex currency trading blog with tools and tips that will help you to build a good trading toolbox.
Visit my blog at http://www.myforextoolsonline.com/.
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