TYPES OF TRADING STRATEGIES
Hello to all!
Throughout the history of the forex market, several types of strategies related to the trading interval have been invented. Strategies have differences in the time of holding a position, and each trader must choose the type of strategy that suits him.
SCALPING
Scalping is a well-known style of short-term trading, using technical analysis.
Scalpers, as a rule, enter into impulse movement, on breaking through levels or rebounding from them, in areas where large volumes of orders have accumulated, and close positions immediately after the end of the first impulse.
They do not sit out in a position and do not hold it for a long time. Positions are usually closed within a minute.
Scalpers use tick or minute charts for analysis.
Impulse movements can be born during the period of news release, so the trader should follow the news.
Since scalpers take a small number of pips, their profit also depends heavily on the spread, so they trade liquid pairs.
Day Trading
Day traders open and close positions within the day. They do not transfer transactions to the next day.
5- 30 minute charts are used for analysis.
Day trading differs from scalping by holding a position for a longer time, up to several hours, if the trend allows.
Day traders profit only from intraday fluctuations, so they can afford to use higher leverage levels than long-term traders.
SWING TRADING
Swing trading is a method of trading with holding a position from several hours to several days, that is, positions can be left overnight.
Swing traders use hourly and higher charts to analyze the chart.
Much attention is paid to trading formations and levels, indicators are used.
Swing traders can profit from both trends and corrections, because the profitability may be higher than that of trend traders.
NEWS TRADING
Such traders pay attention to the news more than anyone else.
The opening of a position is made during the release of important news that can push the market against the trend or, conversely, disperse it.
As a rule, such traders do not leave their positions overnight.
The idea is that during the release of important news, market volatility increases and it is here that traders who trade on the news earn. They wait for this liquidity, open positions before the news comes out and hold them under any circumstances.
TRADING ON TREND
Trend trading is a very well-known type of trading and perhaps the most profitable.
Everyone remembers the rule: Trend is our friend. And this friend can bring big profits, without serious emotional burden.
This type of long-term trading implies the ability to identify a trend with the help of technical analysis and opening positions in the direction of the trend.
The main indicator for trend traders is the trend itself, so holding a position can be from several days to several months until the trend stops.
Often, in order not to lose profit, a treling stop is used.
To analyze charts, traders of this type use daily and weekly charts. They often use long-term models and resort to using fundamental analysis to open and hold positions.
The spread does not bother them, as positions are opened for a long time, so trend traders can afford to trade illiquid pairs.
Conclusion
It is not enough to know what types of trading strategies there are, it is very important that the strategy suits you. Maybe you like to take profits quickly and leave the market? Or do you like to hold positions for a long time and you don't like to follow sharp short-term price fluctuations? Every trader should understand himself first, and only then choose a strategy.
Throughout the history of the forex market, several types of strategies related to the trading interval have been invented. Strategies have differences in the time of holding a position, and each trader must choose the type of strategy that suits him.
SCALPING
Scalping is a well-known style of short-term trading, using technical analysis.
Scalpers, as a rule, enter into impulse movement, on breaking through levels or rebounding from them, in areas where large volumes of orders have accumulated, and close positions immediately after the end of the first impulse.
They do not sit out in a position and do not hold it for a long time. Positions are usually closed within a minute.
Scalpers use tick or minute charts for analysis.
Impulse movements can be born during the period of news release, so the trader should follow the news.
Since scalpers take a small number of pips, their profit also depends heavily on the spread, so they trade liquid pairs.
Day Trading
Day traders open and close positions within the day. They do not transfer transactions to the next day.
5- 30 minute charts are used for analysis.
Day trading differs from scalping by holding a position for a longer time, up to several hours, if the trend allows.
Day traders profit only from intraday fluctuations, so they can afford to use higher leverage levels than long-term traders.
SWING TRADING
Swing trading is a method of trading with holding a position from several hours to several days, that is, positions can be left overnight.
Swing traders use hourly and higher charts to analyze the chart.
Much attention is paid to trading formations and levels, indicators are used.
Swing traders can profit from both trends and corrections, because the profitability may be higher than that of trend traders.
NEWS TRADING
Such traders pay attention to the news more than anyone else.
The opening of a position is made during the release of important news that can push the market against the trend or, conversely, disperse it.
As a rule, such traders do not leave their positions overnight.
The idea is that during the release of important news, market volatility increases and it is here that traders who trade on the news earn. They wait for this liquidity, open positions before the news comes out and hold them under any circumstances.
TRADING ON TREND
Trend trading is a very well-known type of trading and perhaps the most profitable.
Everyone remembers the rule: Trend is our friend. And this friend can bring big profits, without serious emotional burden.
This type of long-term trading implies the ability to identify a trend with the help of technical analysis and opening positions in the direction of the trend.
The main indicator for trend traders is the trend itself, so holding a position can be from several days to several months until the trend stops.
Often, in order not to lose profit, a treling stop is used.
To analyze charts, traders of this type use daily and weekly charts. They often use long-term models and resort to using fundamental analysis to open and hold positions.
The spread does not bother them, as positions are opened for a long time, so trend traders can afford to trade illiquid pairs.
Conclusion
It is not enough to know what types of trading strategies there are, it is very important that the strategy suits you. Maybe you like to take profits quickly and leave the market? Or do you like to hold positions for a long time and you don't like to follow sharp short-term price fluctuations? Every trader should understand himself first, and only then choose a strategy.
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