Four Major Types of Forex Trading to Make a Profit
At first, trading for beginners seems to be a complex type of activity. To get a good profit or even turn it into a main source of income, a newcomer has to define what type of trading to choose. It is very difficult to select the appropriate type to start. If it sounds familiar, this article will be useful for you.
The Main Types of Trading
When you do not know where to start, then start from the beginning. This is a universal approach to any science. In the case of trading on the stocks, the approaches matter. Understanding the basics will save the new-born broker from copying dubious strategies, concluding on-the-fly trading deals, and unconscious actions that lead to money losses.
So what methods will make a confident Alpari India trader of you? Here are the basic ones:
1. Scalping (lasts for several moments). It is characterized by: Finding successful patterns; More than 10 transactions within a trading operation; The need to spend a lot of time near the monitor; Colossal load on the physical, nervous system; Conclusion of many transactions (100-200 daily), so it is more reasonable to use trading robots.
2. Intraday (lasts a day). It is defined by: Opening/closing of a transaction occurs within one day; Less stressful type of trading on the exchange; No more than 10 transactions throughout the day; Search for entry and exit signals; Knowledge of technical analysis.
3. Positional (lasts 1-7 days). It prescribes the following actions: A small number of transactions per week; Tracking news on the chosen direction, for example, company news, stock markets; Suitable for experienced traders; Requires the ability to find points for opening positions at large levels and their maintenance; Inactive trading style; Takes a minimum of time.
4. Investment/long-term trading (takes from 3 months to 3 years). It is defined by: The choice between short-, medium- and long-term strategies; The use of fundamental analysis is necessary; The entry point can be expected during several weeks or months; The amount of profit depends on the chosen instrument and strategy.
It is worth to mention that professional traders often combine several methods, for example, invest in companies for the long term, and the most optimal entry/exit points are sought within the day. However, it is important to choose one style of Forex trading, from which risk management, investment horizon, and tools will be selected.
What Method to Choose?
The choice of the optimal type of trading is an individual matter. Many factors must be taken into account, including the experience and temperament.
Going through the types of trading, many beginners select scalping. They are attracted by the simplicity of this approach and the rapid completion of transactions. In fact, scalping requires a lot of effort and attention. A trader must constantly monitor market movements throughout the day. A large number of transactions with an unprofessional approach leads to a large number of errors, which causes loss of money. Therefore, novice traders are not recommended to do scalping.
The intraday approach also requires stress-resistance from the trader. Proper construction of the trading system and strict adherence to its rules are of great importance.
Positional trading is the choice of mature conservative traders who are attracted by decent profitability with relatively small risks. This method does not require constant monitoring of the market. As a rule, it is enough to spend up to one hour a day for it.
Investment requires to have excellent knowledge of the market, use the fundamental and technical analysis, the ability to competently manage investments and, of course, great patience. This type of exchange trading does not bring quick results, but in the long term, it allows you to make a good profit.
In any case, success in the world of finance is achieved only if sufficient knowledge and trading skills are developed. The fastest way to get all this is to get trained by professionals.