Why is Forex trading so popular? Because it is full of different trading opportunities and gives you a vast choice of markets, assets, and features. This makes the trading process more enjoyable and most importantly, it gives higher chances to trade with.
As we know, none of the trading strategies and traders are similar to each other. They are completely different because goals, as well as experience and skills, are very individual. This makes trading FX more competitive but on the other hand, more probably profitable.
In this article, we will review four main types of Forex trading which give you fully different alternatives and mostly are the best choice for different trading goals. Remember that experience is not everything, because down below we will introduce some platforms and brokers, which will provide you with an enormous variety of educational programs or tools. The main factor which determines your decision, which type of trader you will be, is your trading goal in the FX industry. So, check the following reviews about each type and decide which one is the most relevant and right for you!
The Four Main Types Of Forex Trading
You can find plenty of different types of Forex trading strategies, which in total can be divided into four main parts. For each type of trading XM account diversity will exactly provide you with the needed features. All you need is to follow this page and select the account according to affordability.
Let’s start with scalping FX trading, which covers the short-term period. This is a quick positioning because you hold the specific position at maximum for a minute. Because the market is small, the price always changes. This gives traders a chance to get small amounts of profits but frequently. This type is featured with high liquidity and tight spreads. Because it requires fast and short positioning, traders only use major pairs such as USD vs EUR, USD vs, GBP, and others.
The complete opposite is swing trading, where traders hold positions for several days. There are some traders who stay in the same position for weeks. Here the daily market analysis is more useful. This type of FX trading is suitable for those who have less time for FX and after a busy work life, spend time on the platform. If you want to try swing, the most effective strategies to use are our momentum and breakout, and trend trading. The most popular platforms for those are MetaTrader accounts from ForexCom and MT5, which you can enjoy from Admiral Markets.
The third type is day trading, which is the ongoing trend in the market. The name of it clearly shows that readers are holding the position during the trading day. So it is a less intense type of FX trading than scalping. They are opening and closing positions on the same day and only trade with current, small but higher than scalping moves. The main aim of day trading is to avoid the risks connected to long-period holding or trading and minimize the massive fluctuations. So, the profits are not high but the frequency is daily. The most helpful in day trading is using technical analysis with MACD or RSI.
The highest position holding period is position trading. Here, traders are mostly focused on long-term positioning, and higher amount offers. You are able to hold a position for weeks and even for a month. So market analysis is not as intensive as other types. You should base the analysis on daily and monthly results, which means the technical analyses are not enough. You have to make a fundamental analysis too. If you love following trends, then you need to definitely choose this type of trading because this is the best option to catch a trend and use it in your positioning decisions.
What are the key differences between FX types and How To Choose Right For Me?
In FX trading types, everything is about time. So the key difference between the described types is the period of position holding. Which one is the best for you depends on your goals and skills. If you are not very patient and waiting is the last thing you want to experience, you need to become a scalper, but it requires a tense market analysis. So make sure you have time for that.
The same can be said for day traders. During the day you have to use all possible alternatives and cognizant techniques to make the day trading as profitable as possible. Market analysis is essential. So you need to choose a great platform such as a pro-standard FX market from RoboMarkets or XM Ulta Low account.
But if you are a more patient trader and your goal is to achieve big steps with great profits, you can become a position or swing trader. It is not the best option for beginners because to avoid fluctuations occurring in the long-term prospects, you have to be good at fundamental analysis.
To conclude, each type of trading is good to choose because all of them can give you high profits if you use them correctly. So the main key is you and your skills. Determine the best trading type according to that.