Forex Scalping Forex

What Are The Most Important Forex Trading Strategies

There are many different types of forex trading and there is almost certainly a style you can use to suit your needs. Forex Scalping Forex scalping is where the trader aims to profit from very small price movements. Scalping is often done using high leverage so more substantial returns can be achieved from smaller movements.

Of course, it is important to be aware that leverage will make losses as well as gains bigger. Scalp trades usually last up to a few minutes. It is not uncommon for a scalping trader to make many 10's or even 100's of trades per day. Due to the high volume of trades, finding a broker with very small spreads is absolutely critical to have any chance of success.

Also, some retail forex brokers dislike traders using scalping strategies, so it is a good idea to speak with the broker before you begin scalping with them. Carry Trades A carry trade is where the trader buys a currency with a high base rate, whilst selling a currency to a low base interest rate. Historically New Zealand has had a significantly higher base rate than Japan.

By going long on the pair NZD/JPY, you will earn the difference between the New Zealand bank rate and the Japanese bank rate for each day the position is open. Carry trades are renowned for having severe periods of "unwinding". A carry trade unwind involves a significant dip in carry pairs, often resulting in losses for traders who keep their positions open. It can often be an ideal opportunity to buy a carry pair after a major unwinding.

Day Trading A day trader opens and closes his or her positions during the same trading day. Positions are not held overnight. Day trading is perhaps one of the most difficult trading styles to be successful. It can be extremely stressful and does require a great deal of time spent at the computer waiting for trading setups to arise. Most day traders do lose money.

The odds are stacked against the trader for various reasons including; large quantities of trades are made, often making it difficult to make a profit after paying the broker spreads and the high time commitment of day trading can make it stressful and make you prone to making more mistakes. Another factor is it can be hard to eliminate the random noise when trading short time frames.

However, this said, there are day traders who are successful, but it is usually after a lot of hard work. Swing Trading Swing trading strategies generally involve keeping positions held overnight. Typical swing trades are open between two days to several weeks. Swing trading is less time demanding than day trading and a swing trader will typically make fewer trades than a day trader, thus reducing the broker fees.