Forex Trading Strategies

Forex TRADING STRATEGIES Forex traders use a number of strategies to trade currency pairs successfully. Ideally, you will choose the forex trading strategy best suited to your personality, lifestyle and risk tolerance. The sections below describe the most popular forex trading strategies in order from the shortest to the longest time frame a trade is typically held for. SCALPING DAY TRADING Scalping is a popular short-term trading style, used in the majority by technical analysis traders, discretionary traders, or system traders. Day trading involves establishing and closing out all trading positions within the normal trading session chosen by a trader. They Never Hold Take SMALL PROFITS -to Buy or Sell by RAPIDLY ENTERING OVERNIGHT POSITIONS & EXITING Their preferred technical analysis 30E) charting time periods are typically five and thirty minute intervals. Scalpers never carry a position overnight and will typically close out a position within a minute of entering it. They also often use the tick or one minute exchange rate charts for their technical analysis. Day traders can only profit from intraday moves, so they might tend to use higher levels of leverage than traders with a longer time horizon to magnify their profits from exchange rate shifts. Scalpers thrive on volatility, such as that which can occur just after the release of major economic data. Scalpers' profits are especialy sensitive to the dealing spread, so they prefer to trade the most liquid currency pairs. SWING TRADING AA Swing trading involves establishing and then closing out trading positions based on the momentum of the NEWS TRADING underlying currency pair, usually as determined by appropriate technical indicators. News trading involves trading around the time of a key news event, such as a major economic data release, and it generally does not involve taking overnight positions. KEY NEWS THE WALL STREET.RNAL EVENT Hork eimes Alternatively, they might establish a position just Their trading focus is typically on near term exchange rate movements, with all positions closed out within from one to four days, so they do hold overnight positions. News traders thrive on a news release has come out 1HR volatility, so they might establish forex positions just to take advantage of the wide exchange rate swings that can occur if the result differs 24 Their preferred chart time periods for technical analysis are typically one hour and daily intervals, and they often watch for chart patterns to give them trade ideas. Since swing traders can profit both from trends and corrections, they can show a higher rate of return from their trading activities compared with trend traders. ahead of the news event and 22 hold them through any movement that may result. significantly from the market's consensus. 20 18 24HR BEFORE AFTER 16 KEY NEWS 14 10 12 EVENT TREND TRADING Trend trading is a longer term trading strategy that often involves using technical analysis to identify if and in what direction a trend exists, and then determining suitable entry points. Take Positions Only IN THE DIRECTION OF Trend traders generally take overnight positions – sometimes running a position for months until the trend concludes – and they will often use trailing stops to protect the profits on a winning trade. hihli PREVAILING Trend traders also tend to prefer daily and weekly chart time periods for their technical analysis, and they often use longer term chart patterns and fundamental analysis to yield trade ideas. Trend traders are relatively insensitive to the dealing spread, so they can trade in relatively illiquid currency pairs. Exchange Rate Movements OR TRENDS www.orbex.com Investor Alert: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. There is a possibility that you may sustain a loss of some or all of your investment and therefore you should not invest money that you cannot afford to lose. Serving Tradors Responsibly