If you are reading this article, you are most likely involved in one way or another in the forex trading industry. Also, in order to trade the markets, you are using a certain methodology, or a set of established rules that guide throughout the process of trading.
What type of strategy are you using?
Apparently a simply question, but most of the traders, especially beginners, have no idea what strategy they are actually using. Since it is very important to understand what you are doing, this material will show you a brief classification of the trading strategies that forex traders use for online trading.
#Time frame – First and probably one of the most important aspect that we could use to determine what type of strategy you are using is by looking at the time frame you are trading. How long does most of your trades last? If the range is between a few seconds and a few minutes, you are using a scalping strategy, so you are a scalper.
If your trades last more than a few minutes but you close them the same day you are opening them, you are a day trader.
A trader who takes trading positions and keeps them open for a few days in row, on average, is a swing trader. Last and not least, longer term trades, than can last for a few months some times, are part of another category of trading strategies, called position trading.
#With-trend vs. counter-trend – We can also classify trading strategies based on the direction you are generally trading. In case you open most of the trades in the dominant direction of the market, in other words you are profiting from the impulsiveness of the trend, you have a with-trend trading strategy. On the other hand, if you are taking trading decision in the other side of the dominant direction you are using a counter-trend trading strategy.
To sum up, these are the most important types of trading strategy, based on two criteria: time frame and direction of the market. If you did not know what strategy you were using, now you most likely do.
Risk Warning and Disclaimer
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. No information or opinion contained on this site should be taken as a solicitation or offer to buy or sell any currency, equity or other financial instruments or services. Past performance is no indication or guarantee of future performance.