This is the most common trading style adopted by novice as well as experienced traders during intra-day markets. Traders open short term trades, having a small duration such half an hour to 4 hours and also close any open position by the end of the day i.e. before 22 GMT. The reason for short term trading is to used to yield small profits and save big losses. Novice traders do not like going into stressful sleeping hours, much to their relax and peace of mind, this style is well known for beginners.
Longer time frames involve swing trading style since the experienced traders like to remain calm and invest big money and yield high profits. Swing trading style can go to 4 hours to days and weeks to months. Traders analyze the market trends and news data, forecast the results and open trades for lengthy periods.
Traders who closely analyze market trends using technical tools looking at price charts, graphs and measure the strength and weakness of currency pairs using technical studies such as Moving average, Fibonacci calculator, Bollinger bands, and various other calculation methods. Traders look for the trade signals and execute the trades.
This style is totally software dependent where trader sets rules for entry and exit points for each trade, later the software looks for predefined values and triggers the trade execution and closes a trade when it reaches its stop loss or takes profit limits. Traders add an automatic script in an MT4 trading platform, which is also known as ‘Expert Advisor’ or EA when any EA added to a currency pair, it automatically opens and closes the trades according to the script commands.
Financial and economic news and big events in the world put good or bad effects on a currency pair, stock markets, and other exchange-related businesses. Traders keep a close on eye on the various upcoming news and taking advantage of the news outcome, they open trades.
Traders usually analyze the momentum direction of an asset or instrument toward higher highs or lower highs, if direction suggests an uptrend (Higher Highs) trades follow the trend until it ranges or moves in reversal. This style is widely suggested by experienced traders and has a high success rate.
This style involves price movements and congestion points on the chart, looking at support and resistance levels of the asset, traders sell an asset at the resistance level and buys at a support level.
It is a very popular style among novice traders for short-term trades, ranging from 1 pip to 10 pips. Traders open and close trades so fast earning small profits. Most brokers forbid scalping and set a minimum time for closing a trade around 180 seconds. It is not a recommended trading style since it involves a higher risk of losses due to volatile nature of a market. Scalpers often lose huge sums of money.
My favorite part of doing these reports / articles is participating in the conversation they provoke. Each week, I ask one question. This week, it is this:
Question: What is your favorite trading style?
