Dear readers, What about you ? Hope so that, everything going alright. Today I want to discuss Forex trading style. So, lets jump on to the journey. Always keep it in your mind, if you don’t have a proper trading formula or discipline, trading on the Forex market is very difficult for you, though you are pretty well for trading strategy or technique, but without knowing a proper trading system, you can never be a successful trader. Please remember that, You will get an unlimited income from Forex, yes that's true, but if you don’t have right chemistry, then its just only mirage for you nothing more than that. There are so many traders who have got little knowledge about Forex & they slurry on the dark, maybe they get some profit & they seems to be they understand the Forex. But question is that, does the matter be so easy ? Answer is that unfortunately no. But a good trader never runs his trading like that way. If you analyze the successful trader life cycle, then you will discover that, to become a successful trader, he or she needs a lot of time to learn & they deserve a good result during his whole life. Hence, I am telling you, give up hurriedness, at first take your time to learn every single part of Forex (technical & fundamental), then, you could do well.
We have already discussed so many things, now this is the right time to go to main topics. How do you understand that, the system you are trading is right or wrong ? Some points are given below , try to cope up with your trading system, & select your best trading style. There are so many traders who lose their trade, without understanding the timeframe. New traders tend to get too much excited & they trade in a wrong timeframe & It's resulting a loss which is not compatible with their trading strategy. And end of the day, They lost from Forex market forever. Because as you know that, Forex market chart gives you different trends in different timeframe. Such as if you observe five minutes chart in any pair may be its indicate the up trend of this pair, on the other hand if you look through one hour chart in same pair who knows it will be sell trend. So, before placing the order you have adjusted your timeframe. But you don’t able match the time certainly in the Forex market. You have to select your timeframe, depend on your own strategy & target. You can set your target in three kinds of timeframe. Here you can check it out:
Intraday timeframe - 1-15 minutes
Short timeframe - 1-4 hours
Long timeframe - One day or more
1. Short Time Trading:
In this method you can trade in two ways:
• Day Trading
2. Long time trading:
There are also two types of trading method.
• Swing trading
• Position trading
01. Short Time Trading :
Scalping In this type of trading method you have entered & leave the market in just few seconds. Since it is a limited time of trading, you have to do more than 100 trades daily. Each trade you should take limited profits just like 3 – 5 pips. You have to trade on a dynamic market trend depend on a one-minute chart.
Benefits of Scalping Trade:
--- You can trade to take low amount of risk
.--- Accuracy level is high
.--- No need to fundamental analysis.
--- There is no risk to sudden market change
.--- Every day you will get several times this type of facilities.
Difficulties of Scalping Trade
---- You feel tremendous amount of pressure in this type of trade.
---- You must need a fast order execution broker.
---- You have to pay a lot more transaction cost. ( If you do 20 trades daily you have to pay 60 pips spreads.
Short time day trading :
In this type of trade starting from a minute to all day long. If you want to trade in this method you should wait for the market trends with very discipline & patience. In this case, Most of the traders follow the technical strategy. In this system you will get 1 to 5 trades every day. For day trading you should use 5 to 30 minutes timefram
Benefits of day trading
---- Get a scope to unlimited income
---- You can trade in short term trends.
---- There is no risk to change in the market.
---- You can use different types of method.
Disadvantages of day trading :
---- Have to maintain a proper rule for trading
.---- Need more patience to get better output.
---- Using different types of strategy in different pairs.
---- Have to stay up to date with market news on a daily basis.
Long Time Swing Trading :
In Long Time Swing Trading each trade takes 3 to 5 days to reach their destination. You get opportunity to trade in medium term trend & enter the trade any time. You have to monitor your trade couple of times in a day & 1 to 4 hour charts is the best for Long Time Swing Trading. For this trade, you can use Technical Analysis tools such as double top/bottom, triangle chart pattern.
Advantages of Swing Trading :
----- Huge possibility income a lot in one trade.
----- You can get more returns than day trading.
----- The trader keep themselves cool & calm when market is falling, because they have got enough time.
------- Low transaction cost.
------- Limited mental stress.
Disadvantages of Swing Trading :
------- Need to huge investment.
------- Waiting for a long time a good return.
------- Level of accuracy is not up to the mark.
------- There is a risk in the session break.
Position Trading :
Position trading takes from day one to few months time to reach its destination. This is the longest trading method in Forex Market. Traders always have to trade on long time forecasts in this trading method. You have to place an order depend on 4 hours to day chart timeframe. This is fine, if you monitor your trade couple of times in a day. You can get opportunity to trade in long time pivot point breaks.
Benefits of Position Trade :
----- You can get returns more than 500 pips.
----- While market runs against the trader, they don’t bother it.
----- Low transaction cost.
----- Low mental stress.
Disadvantages of Position Trade :
----- Need a huge investment.
----- Waiting for a long time a good return.
----- In this method, trade accuracy level is not more than 50%
----- There is a risk in session break.
Which method you should have chose :
Every Forex trader has an independent spirit, trading strategy, demand & time. Its only depends on your target & demand which method would you like to choose for your trading. For example, swing or day strategy is best for job holder or if you can keep an eye on the charts simultaneously scalping can be good for you.
On the other hand, if you want to trade in fundamental analysis, then long time or position trading will be good for you. Hence, what is your demand & how much time you would like to spend on your trading, considering all things, then you can make a decision which trading method you would like to trade.
So last but not the least , whatever decision you make, before you go to real trade, you must have improved your strategy in demo trade.