Forex traders use Forex trading strategies to buy or sell a currency pair. There are many Forex strategies used by traders including technical analysis or fundamental analysis. A Forex trading strategy can be considered good when it allows the trader to analyze the market and properly execute the trades keeping the risks in context.
The strategies are compared by the trader keeping in mind three criteria namely the time required, trade opportunity frequency and what is their typical distance to target. Multiple factors are put together to formulate a trading strategy. It is important that traders understand and make themselves comfortable with the strategies before following it.
For instance, for some traders, day trading strategy might fit appropriately. And many forex success stories too exist for that. The day trading strategy is designed to trade financial instruments within the same trading day. Whereas the other might prefer the Swing trading strategy which is speculative asking the trader to take advantage of both the short and long positions in the market. Allowing them to pick the tops and bottoms in the trending markets. They can hold their position for a few hours to a few days depending on their goals.
Forex scalping strategy is another strategy some traders prefer according to their resources. It is a tragedy where the traders choose to take small profits on a frequent basis by opening and closing multiple positions throughout the day manually or predefined guidelines.
A suitable strategy should be decided after taking into consideration the trader’s goals and resources which are unique in each case. Different strategies appeal to different traders. The correct strategy will ensure traders take steps in the right direction.