Throughout the history of the forex market, various types of strategies related to range trading have been invented. The strategies have differences in the timing of holding a position, and each trader must choose the type of strategy that suits him best.
Scalping is a well-known style of short-term trading that uses technical analysis.
Scalpers, as a rule, enter into momentum movement, breaking levels or recovering from them, in areas where large volumes of orders have accumulated, and close positions immediately after the end of the first momentum.
They don’t sit in one position and don’t hold it for a long time. Positions are usually closed within a minute.
Scalpers use tick or minute charts for analysis.
Momentum moves can be born during the news release period, so the trader should follow the news.
Since scalpers take a small number of pips, their Profits are also highly dependent on the spread, so they trade liquid pairs.
Day traders open and close positions throughout the day. They do not transfer transactions to the next day.
Charts from 5 to 30 minutes are used for analysis.
Day trading differs from scalping by holding a position for longer, up to several hours, trend permitting.
Day traders benefit only from intraday fluctuations, so they can afford to use higher leverage levels than long-term traders.
Swing trading is a trading method where a position is held from several hours to several days, i.e. positions can be left overnight.
Swing traders use hourly charts and top charts to analyze the chart.
Much attention is paid to trading formations and levels, indicators are used.
Swing traders can benefit from both trends and corrections, because the profitability can be higher than that of trend traders.
These traders pay more attention to the news than anyone else.
Opening a position is done during the release of important news that can push the market against the trend or, on the contrary, disperse it.
As a general rule, these operators do not abandon their overnight positions.
The idea is that during major news releases, market volatility increases and this is where news traders win. They expect this liquidity, open positions before the news breaks and hold them under any circumstances.
Trend trading is a well-known and perhaps the most profitable type of trading.
Everyone remembers the rule: the trend is our friend. And this friend can generate great benefits, without a serious emotional charge.
This type of long-term trading involves the ability to identify a trend with the help of technical analysis and opening positions in the direction of the trend.
The main indicator for trend traders is the trend itself, so holding a position can be anywhere from several days to several months until the trend stops.
Often, in order not to lose profit, a treling stop is used.
To analyze charts, traders of this type use daily and weekly charts. They often use long-term models and use fundamental analysis to open and hold positions.
The spread does not bother them as positions are held for a long time, so trend traders can afford to trade illiquid pairs.
It is not enough to know what types of trading strategies exist, it is very important that the strategy suits you. Perhaps you would like to quickly take profit and exit the market? Or do you like to hold positions for a long time and do not like to follow sharp short-term price fluctuations? Every trader must first understand himself and only then choose a strategy.