Forex Trading Styles 3



Good day everybody.

Welcome to my new series for friends who are new to forex trading.

At the end of this series, my aim is to help you embark on your journey of forex trading.

To foster the right mentality and style.

I call this series, Learn Forex The Right Way Series.
Today with part 3, we shall explore the 3 main forex trading styles.

Proper planning in forex is a crucial requirement. Without doing so, your trades will be no different than trying to cross a bridge without railings in total darkness! To be able to plan well, you must understand which style of trading suits you. Before you start wondering which method of trading you want to attempt, it is most important that you know your style.

 

Are you keen for fast action, moderation action or you prefer it slow?

Fast action : Short term trading

Typical trading method

  • scalping

Probably suitable for people who

  • hold trades spanning minutes
  • have the time to stare at their trading screens
  • are comfortable with take profit and stop loss sizes of around 10 pips
  • are comfortable with the 1 – 5 minute charts

Critical points to note for this style

  • news and economic data releases may trigger spikes that may wipe off your positions
  • start and end of market sessions may trigger spikes that may wipe off your positions
  • low volume conditions may make it challenging to execute the trades
  • precision is required when entering trades due to the small stop loss


Moderate action : Medium term trading

Typical trading methods

  • range trading
  • break out trading
  • momentum trading

Probably suitable for people who

  • hold trades spanning hours
  • occasionally check on their trading screen
  • are comfortable to wait for hours for a suitable entry position
  • are comfortable with take profit and stop loss sizes of around 50 – 100 pips
  • are comfortable with the 15 – 60 minute charts

Critical points to note for this style

  • major news and economic data releases may trigger spikes that may wipe off your positions
  • general knowledge of market sentiments is crucial to trade planning ( For example risk aversion )
  • knowledge of technical indicators such as support and resistance lines is required to fine tune the trades


Moderate action : Long term trading

Typical trading methods

  • major support and resistance trading
  • long term momentum trading
  • fundamental trading

Probably suitable for people who

  • hold trades spanning days and weeks
  • occasionally check on their trading screen
  • are comfortable to wait for days for a suitable entry position
  • are comfortable with take profit and stop loss sizes of around 100 or more pips
  • are comfortable with the 4hour or longer charts

Critical points to note for this style

  • adverse news and economic data releases may trigger spikes that may wipe off your positions
  • in-depth knowledge of market sentiments is crucial to trade planning ( For example risk aversion and upcoming possible interest rate hikes or reduction by central banks )
  • knowledge of technical indicators such as support and resistance lines is required to fine tune the trades


Knowing the most suitable style of trading for yourself is crucial. It is the foundation of your forex trading journey and a strong foundation it must be for the best chances of success!

Trade Safely.

If you are still unsure, you can try this facebook application that i created that may help you determine what kind of forex trading style suits you.

<< Previous in the Learn Forex The Right Way Series ( Myths and Truths of Forex Trading )

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