Advantages and Disadvantages of the FOREX Trading Strategies
The trader who loves to take challenges, Forex market is an appropriate place for him. To be good at trading, you must select a perfect strategy. For building a strong career, you need to choose the style that suits you better. But you need to know about the benefits and pitfalls of every strategy. By taking the wise steps, you can uphold your trading process properly. In this article, we will introduce the four major styles used by the profitable traders.
Position Trading Strategy
Position trading strategy is one of the significant trading edge widely used by the experts. While using this strategy, you can hold the asset for several months or even years. So, if you want to reduce your stress level, use the position trading strategy from the start. While using this strategy, you do not need to make any quick decisions. Take your time and evaluate the critical technical data precisely. Eventually you will be allowed to set the perfect risk to reward ratio in the trades.
To become a position trader, you must start with big capital. Since you will close the profitable trades with a significant delay, it is important that you make substantial profit from the winning trades. It will be only possible if you trade with decent capital.
Swing Trading Strategy
In swing trading strategy, you will be taking the trades based on the key swings. These swings are usually evaluated in the daily chart. So, if you adopt this approach, you can hold the asset for some days or weeks. Before choosing this style, you need to gain knowledge about some terms. These are pullbacks, trade breakouts, moving average, sell resistance, candlestick pattern, and buy support.
Once you learn about these term, you can easily get many chances for making money. While using this strategy, most of the trades will be executed with 1:3 or 1:4 risk to reward ratio. But, if you are not technically skilled, this style will not be comfortable. Still we suggest the rookie traders in Singapore to learn this technique as the associated stress in this system is really low. And make sure you chose a great broker like Rakuten, so that you don’t have to deal with any trading stress.
Day Trading Strategy
Day trading strategy is very familiar to the intermediate traders. By using the day trading technique, you will get the chance to trade more and thus potential profit in this system is much higher. But this doesn’t mean, you will be taking the trades with high risk and start overtrading. Try overcome your emotional barriers for sustaining in Forex as it puts huge pressure. Keep your eye on the market field for noticing the quick changes. Look for the potential trade signals at the critical support and resistance level so that you can take the trades with confidence.
Scalping is a short-time approach. In this method, you need use the momentum of the market to buy and sell the asset. While scalping, make sure you have complete control over your emotions as slight mistake can cost you heavily. So be disciplined while using this strategy. Usually the professionals give suggestion not to adopt this approach as it very hard for the novice traders to monitor the short term movement of the price. However, the skilled traders loves to scalp the market as they can quickly analyze the market data and find great trades in the lower time frame.
No one can say any strategy is better than others. This depends on the investors’ capability. Once the approach suits you, you will not think about the reward. At times, traders do not analyze the market in a rational way. Eventually they face devastating loss. So, try to learn the proper way to do the technical analysis.
Now you know about the pros and cons of these significant four strategies. Take your time and use these system in the demo account. Evaluate the result and pick your desired trading system to develop to trade the real market.