4 Different Forex Trading Strategies with Pros and Cons
We know that the Forex market is highly challenging and competitive. So, a Forex trader needs to adopt the right strategy that suits him or her most, and thus he or she can proceed ahead or build a strong business career. The traders or investors can decide the correct time to purchase or sell the currencies by following the Forex trading strategies. The businessmen or the investors can apply several Forex trading strategies through two sorts of analysis that is known as:
- Fundamental analysis
- Technical analysis
FX trading strategies’ mentionable benefits are that the traders can analyze the market movements well by applying them and can make wise trade decisions to the emergence or grow their business effectively.
Four different trading plans
Now, we intend to highlight the four different Forex trading strategies with pros and cons in the following part of our article:
Position trading strategy
Position trading is one of the leading strategies or approaches among the different FX trading strategies. It indicates such a type of market approach that is long time-based and can stay until several months or weeks. The position traders in Singapore use the fundamental analysis, for example, GDP, NFP, Retail sales, and vice versa, in order to provide a bias in their trading. However, you can utilize the technical analysis also. You can also try to demo account at Saxo to learn the details. Feel free to try it out here and boost your skills.
- In this market approach, the investors can enjoy the advantageous risk to reward ratio.
- There are fewer stresses prevalent in this market procedure as the businessmen are free from short-time price ebb and flow concerns.
- The main con or pitfall of Position trading is that a vast amount of capital is required here.
- You may not create or produce revenue every year, as there are little market opportunities.
Swing trading strategy
It is a medium – time frame business strategy in which the businessmen can continue their trades in several days or even for some weeks. As the traders in this approach secure ‘a single move’ so they are familiar with the name as ‘Swing traders.’ The investors who want to adopt this business strategy, they need to know the following technical terms or concepts:
- Sell resistance
- Buy support
- Trade pullbacks
- Trade breakouts
- Moving average
- Candlestick styles
- You can continue full -time task or job along with Swing trading.
- The swing trading approach is profitable every year since it has more business options or facilities.
- Here, as a businessman, you can enjoy a medium sort of risk to reward ratio.
- This strategy demands robust technical analysis that seems to be difficult for a trader.
Day trading strategy
It is a popular trading approach that uses financial tools to trade on the same day. Here, the investors can be busy with multiple trades or a single trade all around the day. Moreover, this business procedure’s unique feature is that here all the trade positions are close down before the market closure.
- In the Day trading technique, the risk: reward ratio or percentage remains medium.
- There are ample amounts of business opportunities.
- As the business transactions are closed at the end of the day, the businessmen do not carry any overnight risks.
- It may be stressful for you, as you can notice the market movements frequently.
- You can lose more money if you face massive slippage.
Scalping trading strategy
This business tactic is designed for a short time. The duration of this strategy will be some minutes or a few seconds. In this business technique, investors should apply the order flow tool to help them purchase or sell orders within the marketplace.
- A scalping business strategy can be profitable for you.
- You can enjoy enormous trading opportunities every day.
- It may be a highly stressful business strategy.
- The financial cost is high, here.
Finally, we can say that it will be useful if you choose that business technique which suits you most.