Trading strategies vary considerably from trader to trader, depending on their personality and risk appetite.
What follows in this section and its subsections consists of descriptions of a number of the most commonly used forex trading styles, along with a brief review of the techniques involved in implementing them.
Types of Trading Strategies
Each of the primary trading styles has been briefly introduced below. They have been placed in order according to the time frame that the trader operates in when employing that strategy, from the shortest to the longest time period that the trader typically holds a position.
* Scalping a very short term strategy used mostly by market makers and speculators to attempt to capture the bid/offer spread.
* Day Trading a short-term trading strategy in which a trader liquidates all positions before the end of the trading day.
* Range Trading a short to mid-term strategy based on first identifying and then trading within a range. Involves selling at the top of the range and buying at the low end of the range.
* Swing Trading basically, buying low and selling high, often using technical analysis to determine swing points where the market is oversold or overbought.
* Trend Trading the most long-term of the trading strategies, trend trading involves identifying and trading the overall direction of the market, often until a reversal occurs. Trailing stops will often be used to protect profits.
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