Types of Forex Trading Strategies Known To Work

    College student holding books and backup before math class

    Do you think of investing in a forex trade? If so, have you ever been stuck as you try to figure the forex trading strategies that can work? You might have not come across some of the best strategies and you felt frustrated. The worst experience is losing money and you see other traders making money using their strategic techniques.

    In this article, I have decided to share some of the forex trading strategies known to work and how they might suit you. Here is the list from the best broker reviews guide:

     

    • Position Trading

     

    This type of forex trading is a long term approach. When you decide to consider the strategy, you can hold your trades for weeks or even months. The time frames of this strategy will be daily or weekly.

    However, as a trader, you also have to rely on fundamental analysis in the trading that gives a bias. Besides, it might also be essential to use technical analysis so that you can better time the entries.

    Pros

    • No spending much time trading because the trades have to be long term
    • Risk rewarding on trades
    • Less stress

    Cons

    • High capital
    • Require high skills
    • Not profitable every year

     

    • Swing Trading

     

    It is a medium-term type of trading strategy. Here, you can even hold trades for days or weeks. It has a trading time frame of 1-4 hours. However, to succeed in this strategy, you need to learn some technical concepts like candlestick patterns, moving average and support & resistance.

    Pros

    • You can trade part-time
    • You can make a profit every year

    Cons

    • Have overnight risks
    • Can’t run big trends

     

    • Day Trading

     

    This type of trading is short-term trading where you can hold the trades for minutes or sometimes hours. The timeframe for this trading strategy will be 5 minutes to 15 minutes. The main objective will be capturing intraday volatility.

    It means you need to trade volatile sessions because it the place you will make money.

    Pros

    • You will make money on months
    • No overnight risks

    Cons

    • Stressful to watch markets
    • You can lose more than you intend
    • Misses huge opportunities

     

    • Scalping

     

    Scalping is not recommended for retailers because of charges of transaction. They tend to eat all the profits. Besides, if you are slower than a machine, it becomes a disadvantage.

    This strategy is a short term where you can hold the trades for seconds or minutes. You will be concerned with taking advantage of the way the market is behaving

    Pros

    • Healthy income trading
    • Many trading opportunities

    Cons

    • High financial capital cost
    • Stress endeavor
    • Glued to your screen for a long time

     

    • Transition Trading

     

    It is another type of strategy that you must know. Here, you have to enter yourself into trading with a low timeframe. However, if the market will favor them, one will be able to increase the target profit.

    Pros

    • High rewards
    • Low entry-level risks

    Cons

    • Skills of multiple timeframes
    • Only a few trades bring profit

    *Invest at your own risk – opinions are of the contributor and not necessarily that of New Theory.

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    • Joselin Estevez

      Social Media Director

      Social Media Director at X Factor Media

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