Trading styles on Forex
Any trader, no matter whether a newcomer or professional player in the currency market, should develop an individual approach to trading. Your personal customized strategy can improve your trading performance on Forex and make it more profitable and successful. It can also prevent you from constantly draining your deposit. Some traders prefer to use ready off-the-shelf solutions designed by professionals while others choose to implement individually crafted plans by combining various trading strategies.
For a newcomer it is always a challenge to adopt a certain trading style and stick to it due to a lack of experience, which leads them to choose wrong strategies.
In order to choose the strategy that works best for you, you should take into account the different trading styles that exist in the forex market. It is also important to consider your financial capacities as well as understand your own inner dynamics and potential.
There are three major styles of trading: intraday trading, intraweek trading, and long-term trading.
1. Intraday trading
Intraday trading is characterized by turbulent market dynamics. This style of trading is most frequently used by forex beginners. Intraday trading means that all deals are made within one trading day. Time intervals between the opening and closing of trades may take from several minutes up to several hours. There are no overnight rollovers (swaps) except for the times when stop orders are executed.
One of the main advantages of intraday trading lies in the fact that it does not require huge investments. All trades are short-term and are meant for taking only a part of profit.
The main drawback of this trading style is that it creates a heavy load of stress and severe emotional strain. Day traders spend all day staring at charts and indicators on their monitors. This style of trading is only recommended for those of you who are confident, decisive and quick to react.
2. Intraweek trading
Some forex players, who feel disappointed with their intraday experience, decide to try out intraweek trading that implies weaker market dynamics. Positions may remain opened for ten days. As a rule, the number of trades conducted within one week equals one or two.
Intraweek trading may be highly profitable given that you have chosen a proper strategy. Traders have a lot of free time during a trading session. However, this style of trading requires larger sums of money.
3. Long-term trading
Long-term traders are exposed to a relatively low level of stress and do not have to spend hours closely monitoring price fluctuations. This style of trading implies working with daily and weekly charts. Your deals may remain opened even for a few months.
On the downside, it is impossible to quit trading at any moment when you trade long-term. Besides, the choice of trading instruments is limited. To achieve success in long-term trading, one needs to possess such qualities as patience and endurance, as well as a considerable amount of money.