Many trading strategy systems on Forex need to be understood by beginners
When you first learn to trade, you might think about the best forex trading strategy that can produce big profits consistently. For this reason, you need to understand some of the existing forex trading strategies and their advantages and disadvantages.
Position Trading
Also known as long-term trading, this strategy is applied by traders who want to take advantage of changes in the price trend of a currency pair for a long time. A position trader usually opens trading positions within a weekly to monthly period.
That way, a position trader does not need to monitor daily price movements and does not need to observe the market too long every day, because you only need to observe trends over a long period of time. However, this technique requires large capital because the fluctuations that arise will also be large. In addition, you must really understand the fundamental conditions of the currency pair so that they don't put up a wrong position.
Swing Trading
Swing trading is a trading strategy that tries to earn profits in stock (or another financial instrument) in the short term. Swing traders use technical analysis to look for stocks with short-term price momentum. Swing traders can take advantage of the fundamental or intrinsic value of stocks in addition to analyzing price trends and patterns.
Swing Trading Strategy
Swing traders must act quickly to find a situation where stocks have high potential to move in a short span of time, therefore swing trading strategies are often used for at-home traders and day traders. Large trading institutions with very large amounts without having to compete with the main traders.
Swing trading involves being in a position either long or short overnight or up to several weeks. The aim is for greater price movements than is done on intra-day bases. Swing trading assumes greater price ranges and price movements and therefore requires careful positioning to minimize downside risk. Swing trading can involve together fundamental and technical analysis. Swing trading usually relies on a larger timeframe chart including 15 minutes, 60 minutes, daily and weekly charts. Swing trading tends to require more waiting time to produce anticipated price movements.
This strategy is run in the medium term, or in a matter of days to weeks. A swing trader looks for a reversal-shaped movement pattern or price reversal, in the hope of putting up the best buy and sell prices to maximize profits.
With this strategy, you don't need to keep up with market developments too often. In addition, the opportunity to obtain profits is quite abundant, because reversals often occur.
Day Trading
For beginners in forex trading, the day trading strategy may be the most frequent. This type of trader only trades within a few hours every day. Thus, you do not need to do the
fundamental analysis that is too deep. In addition, there is no overnight risk because the position is closed at the end of the day.
However, because utilizing price movements that change rapidly, a day trader tends to spend more time watching price movements every day. In addition, you also have to observe price changes at any time to ensure that you don't have the best price momentum.
Controversy about day trading
The potential benefits of day trading may be one of the most debated (and misunderstood) topics on Wall Street. Many internet scams have taken advantage of this confusion by promising enormous results in a short time. Meanwhile, the media continues to promote this type of trading as a get rich quick scheme.
There are many traders involved in this type of trading without sufficient knowledge; However, there are day traders who are successful though, with a high risk.
Many financial professional managers and financial advisors avoid for day trading, arguing that, in many cases, what is obtained is not worth the risk. Conversely, those who do day trading insist that there are benefits that can be made. However, they acknowledge that the success rate is inherently lower as a result of the higher complexity and risks required of day trading, coupled with the many associated frauds.
Day trading is not for everyone and involves significant risks. In addition, an in-depth understanding of how the market works and various strategies for profit in the short term is needed
Scalping
If a day trader opens a trading position in a matter of hours, the scalper trades in minutes. This trading technique is done by placing large amounts of capital in a trading position that is only opened for a few minutes.
The advantage of this technique is that the trading time is very short, so you don't have to linger to monitor price movements and the relatively instant benefits. However, to achieve profit, you really need to be sure of the direction of the price of the currency pair you choose. This requires very high analytical skills and experience.
There are many theories behind scalping, but if you want to make money right now the easiest way is a strategy called "calm river". The advantage of this strategy is not like full scalping but gives room for leeway and can be a good introduction.
You will need:
Timeframe 5 minutes on currency pairs with high liquidity; Two exponential moving averages - MA 50 and 20.
Wait until the current price is in the area between 20 and 50 MA. If the price stays there for up to three candlesticks or more - a false alarm, come back to wait.
But if prices try to get out of that limit - immediately open two orders in the direction of price movements.
Close both using StopLoss if the price returns behind the local extreme; Close the first order using TakeProfit when it reaches the StopLoss value; Close the second order manually when the trend starts to turn around.
Dual/dual orders allow you to close expenses with a first order while chasing a second order unexpected profit. Even if you lose the second order, you will remain in the green area.
By looking at the four trading strategies, you can then choose the trading style that best matches your trading abilities and goals. Also, make sure you understand all the risks that might arise from a particular trading strategy so you can prepare a risk management strategy that can minimize loss and maximize profits.