Trading Styles Guide
It is said, strategy is as important for forex trading as the opened eyes, and focus towards the path is important to drive a car. There are hundreds of forex trading strategies that can be categorized under the four main and foremost and non-negligible trading styles. The four styles of forex trading are as follows:
- Day Trading
- Swing Trading
- Position Trading
Let’s review each of the trading styles separately and see the pros and cons of each trading style.
Scalping is one of the best trading styles where the trader places short-duration trades, high volume, and holds the positions for a few seconds. It gives the benefits of no exposure towards the fluctuations of the market. It also gives high volume and short duration trades. You can see the top 10 forex brokers here who are using this style.
It has lower costs. Instead of all these benefits, we must say it is a stressful and time-sensitive trading style. It is also not suitable for the traders that are doing it as a part-time job. It is dangerous because one loss can create a loss of dozens of trades that are profitable.
It is no doubt, an ideal forex trading style for short-term traders. It is also a low-cost trading style. Day trading style can be algorithmic or manual. It is advantageous because it exposed limited market fluctuations. It also consists of low-cost programs of volume-based rebates.
There are also no rates for the swap. It is also not good in terms of high loss rates. It is a stressful trading style and extremely challenging for the traders. It is also not suitable for the traders that are living a busy life and in inconvenient time zones.
This trading style offers a balanced approach to the medium and average traders. Swing trading is a suitable trading style for the traders who want to trade successfully towards the direction of a trend that is well-established and working.
It is obvious that this is a less stressful trading style as compared to previously discussed styles of trading. It is good for part-time traders. But if we see its disadvantages, then, it is a slower trading style with less profit generation rates.
It is the most patience required forex trading style. It is also known as the buy-and-hold investment style. It is the most suitable trading style for long-term traders that are unleveraged and low-leveraged. It is also considered a low leveraged trading style. It also requires fewer time investments.
It is also statistically sound and well-suited for manual traders. It generates profit but in a slow time span. It is known as the most challenging trading style that you cannot become a frequently successful trader. It is relatively slower than others.
These are the four fundamental trading styles. The suitable chosen style is the one that is according to your availability, ability, and personality. Beginners’ brokers need to switch between the different forex trading styles in order to gain more experience. It can be critical and the beginners can make mistakes but it will give the right approach to get the most out of forex trading.