Commonly Used Forex Trading Techniques

Commonly Used Forex Trading Techniques

Submitted by adil on Fri, 04/26/2013 - 08:04

There are many ways to trade Forex. Some trading techniques suit the beginners while some are perfect for the professionals. Let’s discuss some of the renowned Forex trading techniques.

Day Trading:

As the name suggests, day trading is carried out in one single day. This trading technique is followed by many professional traders.

Scalping:

Scalping is the very short form of trading just like day trading. It is very risky as trades are carried out in short intervals. This type of trading does not suit novice or inexperienced traders.

Swing Trading:

In swing trading, trades can take place from hours to days or weeks. The traders swing the trades. Traders who are involved in swing trading generally execute 2 to 10 trades per month.

Range Trading:

Range trading is associated with support and resistance levels. For those who do not understand the support and resistance levels, here is a short definition of both levels.

Support level:�In Forex, support level is the price level where the price tends to find a support for itself as it is going down.

Resistance level:�Resistance level is opposite to support level. This is the level where the price tends to find resistance as it is going up.

Moreover, support and resistance level are the attributes of technical analysis. So you can see these two levels in that respect (if you are new to these terms obviously).

Trend Trading:

In trend trading, the trader looks to make profit from high probability movements by watching the entries within the trend.� There are two types of trends; uptrend and downtrend. When the market is making higher highs and higher lows, it is uptrend. When the market is making lower highs and lower los, this will be a downtrend. Traders who trade within the trending market generally win, traders who trade against the trend generally loose.

Counter Trend Trading:

Counter trend trading is more risky than trend trading. This trading technique suits to only those who master the trending technique.

Carry Trading:

Carry trading is based on buying the high interest rate currency against the lower interest rate currency and holding the position for longer time. The brokers are responsible to pay the interest rate difference for each day the position is held.

These are some of the common trading techniques used by different traders according to their needs and experience. If you are new to Forex market, go through these and all other trading techniques. After mastering any of these, you can enter the real Forex world.

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