A forex day trading refers to a system where a trader uses it to figure out when they have to buy and sell a currency pair so that the traders can execute the market and can avoid the risks. In forex day trading, it is very important to know and learn about the trading techniques and the fundamental strategies.
In order to start forex day trade, one should keep multiple factors in their mind. And there are various trading strategies and the way in this regard (e.g., Binary Options Ratings). In this writing, we will discuss the top 6 common and popular forex trading strategies. So keep reading to learn more!
Forex day trading strategies:
There are some day trading strategies which divided into some organizational structure. This helps the traders to find out the most applicable forex strategies. Sometimes day trading requires some multiple factors to formulate a plan of forex trading.
The thing to remember that understanding the way and being comfortable with the strategy is very important. There are mainly three criteria that a trader can use to compare different trading strategy;
- The requirements of time resources
- The regularity of trading opportunities
- Typical distance to a target
You can easily compare any trading strategies with these three criteria. So below are given the most popular 6 forex day trading strategies:
1. The trading of price action:
This strategy involves the study of historical prices to figure out technical trading strategies. Price can be used as an indicator. Fundamental rules are barely used here, even though it is not exceptional to incorporate economic events, which works as a substantiating factor.
Several other strategies fall under price action trading—for example, the trade length, Fibonacci retracement, and the identification of trends.
2. The strategy of range trading:
This way of trading includes resistance and identifying supports. Where the traders can place their trades in these key levels, this strategy works significantly well in the market without significant volatility. Technical analysis can be counted as a fundamental tool that is used in these strategies.
The good side of this technique is, traders will get a significant number of trading opportunities. And the downside is, it requires a long time investment.
3. The strategy of trend trading:
This is the most common and simple forex trading strategy. And this is used by all different levels of traders. Generally, trend trading takes place over the medium to the long period. Multiple time frame, price action can be adopted under the trend trading.
The positive side of trend trading is also a significant number of trading opportunities and fewer risks. And the downside of trend trading is the longest time in investments.
4. Positive trading:
This trading is a long term trading strategy. And this also focuses on fundamental factors and methods. These methods can be used in the marker (e.g., Elliot Wave Theory). Besides, this strategy can be engaged with all markets from stock markets to forex.
Positive trading always has a long term outcome, such as a week, month, or even a year. Positive trading is reserved for the more persevering trader. The good side of this trading is, it requires a minimal time investment. And the downside is, it has very few trading opportunities.
5. Strategies of day trading:
This is generally designed to trade the financial implements within the same trading day. In this trading, there can be one single trade or multiple trades throughout the entire day. This is also called short term trading. It takes a very short time, like a matter of minutes or hours.
In this trading, the possibility of risks is minimum, and the trading opportunities are significant. The downside is, it requires so many technical analyses.
6. Strategies of forex scalping:
Scalping is a trendy and common term in forex trading. This describes the process of taking small profits regularly. This can be achieved by opening and closing multiple positions in the market in a day. Scalping requires short-term trades with a basic return.
There are also some pros and cons to this trading. The positive side is; it has the most significant number of trading opportunities compare to all forex strategies. And a downside is, it requires a long time in investment.
The bottom line:
If you are new to forex day trading, then you can check and research the forex trading guides on the internet. (i.e., FX Trading Master). When you know the techniques and strategies of day trading, the risks of loss will reduce.
The above mentioned top 6 forex day trading strategies are just a practice example of this. This may help you to peruse your trading and will make your investment worth it. Hopefully, from this writing, you are now aware of the common mistakes, risks, and positive sides of forex trading.
