In the very beginning of defining a strategy it’s important to choose your trading style. It’s quite logical that the beginners don’t know what style suits them best. Basically, many beginners try all trading styles hoping to find the most profitable one. Well, this approach is wrong, especially if you aren’t familiar with trading styles pros and cons. So, what is the solution? Before I explain the best solution, let’s see what kind of trading style exist. In next chapter you’ll get introduced with trading styles. There are four styles:
Position Trader
Swing Trader
Day Trader
Scalping Trader
Position Traders – hold ther positions from weeks to months. In base they use fundamental analysis to decide what to trade. They also use basic technical analysis.
Swing Traders – holds ther trades more then one day, less then a week. They use fundamental and technical analysis as well.
Day Traders - open and close positions in the same day. Ther main tool is technical analysis, they watch fundamentals only to stay on right track.
Scalpers – are very short term traders, they open and close trades in few minutes, sometimes they trade only several seconds. That’s extreamly trading style. They are very good in technical analysis and they are indicator experts.
What is The best Trading style for you?
If you’re an economist and you’re familiar with money flow between countries, have all necessary information, if you’re good at currency and derivative fundaments interpretations, and have a lot of money that you can invest, then you could start thinking of Position Trading. Swing traders have a similar background with addition that they are people who want a bit of action.
Scalping is the most extreme trading technique with its position opening on a large stake and closing the same in very short time with one single goal – profit. Scalpers are basically technical gurus that know a lot of trading software’s and indicators and they usually make their own indicators that they use on everyday scale. This is a very demanding style, so take my advice and stay away from it.
Day Trading style suits best for Forex beginners especially if you don’t have enough money to invest. This style is most popular with Forex traders and especially nowadays when the big boys manipulate the currency market. Nobody wants to make a long term investment anymore because we witnessed a lot of illogical and unpredictable currency pair movement in last couple of years. Thanks to a Day Trading it’s quite simple to open up the position for a few hours using a strategy, make a profit, and wait for a new opportunity, with no much risk included. Besides, you can find a lot of free and useful tips on Day Trading on the Internet. My advice for you is that you learn how to be a successful day trader. Now that we’ve defined our trading style it’s time to move on to the next step, which is defining the best Currency Pairs and Time Frame for your trading strategy.
