Traders use a number of strategies to trade in the markets, Ideally you will have to choose the best suited to your personality, lifestyle and risk tolerance.
Scalping is a popular short term trading style, used in the majority by technical analyst traders, discretionary traders, or system traders. Take small profits to buy or sell by rapidly entering and exiting.
Scalpers never carry a position overnight and will typically close out all the positions within a minute of entering it. They also ofter use the tick or one minute chart for their technical analysis.
Important: Scalpers thrive on volatility, such as that which can occur just after the release of the major economic data. Scalpers profits are especially sensitive to the dealing spread, so they prefer to trade the most liquid stocks or Index.
Day trading involves establishing and closing out all trading positions within the normal trading session chosen by a trader.
They never hold overnight positions. Their preferred technical annalists charting time periods are typically five and thirty minute intervals.
Important: Day traders can only profit from intraday moves, so they might tend to use higher levels of leverage than traders with a long term horizon to magnify their profits from the exchange rates shifts.
News trading involves trading around times of a key news event, such as a major economic data release, and it generally does not involve taking overnight positions.
Before news: News traders thrive on volatility, so they might establish positions just ahead of the news event and hold them through any movement that may result.
After news: Here trader might establish a position just after a news release to take advantage of the wide swings that can occur if the result differs significantly from the markets consensus.
Swing trading involves establishing and then closing out trading positions based on the momentum of the underlying, usually as determined by appropriate technical indicators.
Their trading focus is typically on near term movements, with all the positions closed out within from one to four days, so they do hold overnight positions.
Their preferred chart time periods for technical analysis are typically one hour and daily intervals, and they often watch for chart patters to give them trade ideas.
Trend trading is a longer term trading strategy that often involves using technical analysis to identify if and in what direction a trend exists, and then determine suitable entry points.
Take positions only in the direction of the trends.Trend traders generally take overnight positions sometimes running a position for days until the trend concludes, they will often use trailing stops to protect their profits.
Trend traders also tend to prefer daily and weekly chart time periods for their technical analysis, and they often see longer term chart patterns and fundamental analysis to yield trade ideas.