Now that you have come this far and almost done with this course, you have all the knowledge you need to get started with forex trading and the next thing you should do is just look out for forex trading styles and then give it a try.
Also I have courses on different strategies for you. But before you randomly select a trading strategy, there is one important thing you should know and do right. This is so important that even now, I feel that I wish someone would have told me this when I first started trading.
Because if I was told, I wouldn’t have wasted my first few months of my forex trading journey. The important thing that I am talking about is selecting a perfect trading style. I know it doesn’t really seem that important but trust me, this is very important.
Let me ask you a question, what if a horse decides to plow on a farm and a bull decides to run in the race of horses? We all know that won’t work out and even if it does, the results won’t be great. This is what happens to me in my early trading days.
At the very beginning of my forex trading career, I had no idea about forex. I just bought a course that promised me that I will earn a lot of money from forex and the course was about scalping.
I started implementing this strategy but even after working hard, I lost a huge amount of money with that strategy. And I had no idea why it didn’t work. I did not know that there are different styles in forex trading.
As this past, I learned the concept of making money from a laptop and started perusing forex. I decided that I will buy different strategies from other successful traders. That was the time I got to know that there are different trading styles in forex, then I realized I was a horse who used to plow on a farm.
You can also say that I was a bull running in the race of horses. I realized that I was doing one big mistake from the start of my forex trading career and that mistake was choosing the wrong trading style.
This exact thing that happened to me has happened to a lot of forex traders out there. I don’t want you all to move in the wrong direction like the rest of out there. So in this article I will share with you what the different styles of trading and how to choose the perfect trading style for yourself.
There are different types of doctors like general practitioners, dentist and more. Also there are different ways to become a doctor based on a study and each has its purpose. That is the same way that there are different ways to types of trading styles in forex for all of us.
There are four main types of forex trading styles, these are:
Scalping trading styles
Day trading trading styles
Swing trading trading styles
Position trading trading styles
Scalping Trading Styles
Scalping is a very aggressive trading style and there are a lot of risk involved in it. But then it has got great rewards too. Scalping is a trading style that traders you one minute to 15 minutes time frame to place a trade and profit from very small or minimum price movement.
A scalper makes trades on smaller time frames and get out within seconds or minutes.
Day Trading Trading Styles
In day trading, traders buy and sell currencies within the same day. That is, traders open and close their trades in a single day and no trades are held overnight.
This is a trading style that traders use 30 minutes to the 4 hour time frame to open a trade and profit from medium price movement throughout the day.
Swing Trading
This is a trading style where the trader opens a position and keeps it running for days or weeks until a trade potential is reached. swing traders normally use the 4 hour or higher time frames to place a trade.
Position Trading
Position trading is a trading style where traders open a position and keeps it running for weeks, months or even years. Position trading is same as investing. You’ll have to hold on to your trades for a long time and be patient for your trade to work out.
In position trading, you’ll have to identify the long term goals based on the fundamentals of the currency involved in the currency pair. These are the four types of trading styles.
Many of you might be thinking which one is the best trading styles at this moment. There is no such thing as a particular trading style is better than the other. Every trading style has a purpose and each one is suitable for different people based on personality and few things.
So instead of searching for the perfect trading style, it is important to the trading style that suits you the most. For example, scalping is best for traders who can’t spend more time on the chart who can also make quick and difficult decisions without hesitation.
Scalping also requires a lot of focus and concentration. So if you have what it requires, you can be a scalper. Further more, you get a lot of set ups while scalping so if you are one of those impatient traders then go for scalping.
Day trading is for those who can’t spend more spend the whole day on charts. It is just like a full time job. You will have to analyze the chart at the beginning of the day and monitor it throughout the day just like to do in any other 9 to 5 job.
With this you’ll get fewer set ups as compared to scalping and you’ll have to be patient. If you are okay with seeing few set ups and spending the whole day on the trading chart then you can choose day trading.
People who have full time jobs and can only do analysis on weekly basis and keep a check on during the week days can easily look at swing trading or position trading as it is less time consuming.
If you have a part time job then you can easily use a swing and position style trading. But you may require a large initial amount to start with. If you choose position trading then finally you are ready for trades with long term goals.
What forex style you should choose
Now, which trading style is the best for you or which forex style should you choose? There are some questions you should ask yourself. The first question is:
Am I a long term or a short term oriented person.
If you are a short time oriented person the scalping or trading can be good for you and if you are a long term oriented person, then swing trading or position trading will good
How much time do I have during the day to trade?
if you have the whole day then go for day trading. If you have 5 to 6 hours then go for scalping. But if you can only check up on you trade once in a day then go for position trading or swing trading.
Do I work full time?
If you have a 9 to 5 job then go for swing trading or position based trading. If you work part time, go for scalping and also if you don’t work at all then day trading will be the best for you.
Am I patient enough?
If you are patient enough then swing trading and position trading style is the right style for you. Trust me, swing trading seem to be dull and a very slow trading style but when it is done right, it is very profitable. But again, if you want quick results then scalping or day trading is the most suitable for you.
These were a few questions I think you need to answer before you choose a trading style. Thank you for being with me until the end of this class. I will link the previous class below as well as the full course where you can access all the articles right from the beginning. This course will help you get equipped as a trader.
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Full course: Forex for beginners
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