What is best for you? Forex Scalping Strategy vs. Forex Long-Term Strategy.
- Position trading (long-term)
In Position trade, the trader holds position for weeks or even months.
The timeframe for the trade will be daily or weekly.
You must analyze the fundamentals of currency pair and wait until the market movement
to reach support before taking your position.
If your analysis is right, your trade will start at the new trend before anyone else.
You may use the technical analysis to improve the entry timing.
- Less time and effort consumption, because you don’t have worry about the short-term fluctuations.
- 1 to 5 or more rewarding than short term
- Need to understand the fundamental and larger capital base
- The profit is not promised every year, because of limited number of trades.
- Swing trading (medium-term)
In swing trade, the trader holds trades from days to weeks. The time frame for the trade will be 1 hour or 4 hours. A swing trader would likely wait to capture one “swing” movement in the market. When the movement happens, you are to trade breakouts, pullbacks and the bounce of the moving average. Also, you are to buy support and sell resistance when the market behaves in pattern. The pattern you must be willing to learn are support & resistance, candlestick and moving averages.
- It’s possible to do the trading while working at full-time job.
- The profits are promised every year, because there are many trading opportunities.
- The profit is not big
- There is an overnight risk.
- Day trading (short-term)
In day trading, the trader holds trades from minutes to hours. It’s a lot like swing trade but with fast pace. The timeframe for the trade will be 5 to 15 minutes. A day trader would like to capture the intraday volatility. It means you must trade for the most dynamic session of the currency pair.
- It is possible to expect monthly income if you are skilled.
- There is no overnight risk
- You must constantly monitor the market.
- There will be lot of losses if you suffer multiple slippage.
- You cannot work for full-time job.
- Scalping (hyper short-term)
Scalping is a very fast paced short-term strategy. The timeframe for the trade will be from seconds to minutes. If you are a scalper, you are targeting to take advantage of market’s momentary movements. You will be using ‘order flow (the buy and sell order book)’ for this strategy.
- Abundant trading opportunity per day
- You can create income proportionate to your effort.
- There is a lot to invest (software, newsfeed, connection, etc..)
- You must watch the market monitor many hours in a day.
- It is very stressful.