What is Your Trading Style?
While entering the Forex market, many questions arise in the mind. If you are a beginner, you may have to go through a phase of uncertainty and face dozens of confusing concerns. This happens because you are not sure about your trading technique at this time. What should be your ideal trading style that can produce maximum profits with minimum risk? Well that actually depends on what type of position you want to take in the market. To know the different trading styles, you have to conduct a little research. Only knowledge and experience can help you achieve what your desire. But if you are new in the Forex market and interested in making quick profits, you should try to know about the scalp and swing trading styles.
What are Scalp and Swing Trading Styles
They are the trading styles that can fetch you a quick profit. But don’t be over exited here. You need to learn a lot many things about trading in the Forex market to earn a quick profit. But for now, let’s have a brief look at these two trading styles so you can understand your requirement and choose the one that best suits your purpose.
Introducing Scalp Trading
You can implement scalp trading style when you trade in the market. Actually, with the help of this trading technique, you try to make profits by establishing or liquidating your position very quickly. You earn profits from a very slight movement in the price. If you want to enter the market as a scalper, you have to aim at making a profit from the bid/ask spread. While playing as a forex scalper, a person tries to buy at the bid value and sells at the ask value. He/she tries to gain from the bid/ask difference.
A scalper usually don’t invest in one single trade and hold the trading position for a long term. A scalper is a short term trader and prefers to make lots of trading in one single day. During scalping, sometimes investors participate in hundreds of trading in one day and walk out with a huge amount of profit. Being a scalper, you have to aim at scalping small profits from every single trade by taking advantage of the bid/ask difference. But it does not mean that if you play as a scalper, you will make profit for sure. You have to read the market, the trading pattern, market sentiment and the past trading trend. Investors, who make huge profit out of their daily trade, invest lots of time on researching and learning trading techniques.
So the basic idea of scalping is making profit from a very slight price movement. Most scalpers often trade for only few seconds. The process of scalp trading is that much faster. You have to be a good decision maker and have to act on your decisions quite quickly. You should know what you are doing. It is often said that impatient investors do very well as scalpers. If you think that you are finding it very hard waiting and keeping patience during trading and want to make profits quickly in a very short trading period, scalp trading is for you.
Introducing Swing Trading
Swing trading is different from the scalp trading style. Many fundamental analysts implement swing trading style while playing in the market. As expert investors are well-aware of the fact that corporate fundamentals may take many days or weeks to make a significant impact on the price and compel the price to move so it becomes possible to make a fair amount of profit from the price movement, they do not mind taking a long term position in the market.
So it can be said that a swing trader may have to hold their position for a few days or weeks to make a profit from the favourable price movement. If you like the idea of swing trading, be sure to keep patience. You may have to wait until the price moves favourably. But don’t think that you have to act like typical fundamental traders or technical traders during swing trading. Being a swing trader, you actually fall between the two. During swing trading, you may have to hold your position for overnight sometimes. But this trading style also tries to capture profits from the short- term price movement.
Many professionals, who play at home or like to invest in day trading, mainly use swing trading style. Like scalp trading, you also have to take swift decisions during swing trading. How much profit you can make actually depends on how well you analyse the price movement. Depending on the demand of a situation, you may have to hold your trading position from one to four days. Sometimes it happens that the stock in which you are investing takes a little more time than your expectation to react. However, the swing trading style does not require you to stick to your computer the whole day. If you decide to play as a swing trader, you may have to keep a track of the corporate news and the other factors that drive the stock price of a corporate. In this case, you may have to be a little more cautious about the trading position that you choose to take and hold.
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