Trading styles on Forex in relation to technical analysis

Trading Styles on Forex

Opponents of technical analysis always come out with the argument that chart is self-fulfilling prophecy, since all profiteers can see identical formations on it. That’s not true. Diversity of trading styles on the currency market paralyzes. You can say one thing. Every Forex trader has his own approach to earning, which is possible to dress into classical frames.

Trading styles on Forex

Trading styles on Forex can be classified according to time-frame of maintaining position

-   Short-term styles: scalping, day trading,
-   Medium-term styles: swing trading,
-   Long-term styles: position trading, carry trading.

Appoint your own speculation style based on the following table:


Extremely short-term speculation technique directed to quick exit from taken positions, at simultaneous use of large initial capital. It requires permanent spending the time before transactional system and selection of very cheap Forex brokers offer (minimal spread). Intermediary platform should also carry out the orders without any delays.

-  Technical analysis a base of speculation
-  Fundamental analysis doesn't have a raison d'etre here
-  Speculation value increases in a period of the highest market flow
-  Maximum leverage adjustment in a short horizon (1 m/ 5 m)
-  Frequent use of Price Action technique (play on “naked” charts, intuitive)
-  Beneficial specialization in selected speculative instrument

Day trading

Short-term trader focused on opening and closing profitable positions in frames of one working day. Day trading is identified with professional trade. Day trading protects against emotional approach to trade, since the end of the day signals the end of the trading.

-  Fundamental information aren't significant
-  Constant position observation
-  Avoiding rollovers
-  Selection of main currency pairs, very liquid due to lower spreads
-  The most important specialization in technical analysis

Swing trading

Swing trading is focused on medium-term, deeper market movements (corrections are most desired). Positions held up to few days. Swing trader is a master of technical analysis, selecting strong support and resistance levels. Overtakes with action popular economic data, which are a base for dynamic speculation. Something for persons, who treat Forex more as a hobby than full-dimension profession.

-  Critical for success knowledge about changeability rates
-  Technical analysis associated with fundamental
-  Requirement for greater optimization of the profit ratio to risk
- Grant permission to trade in a period of smaller liquidity (larger costs of individual transaction)

Position trading

Long-term trading style, in which several months positions are a standard. In position trading there is a perception of fundamental analysis superiority over technical. Strategy of the risk management has a high significance. Technique dedicated to patient investors.

-  Monthly and weekly intervals are a base for selection of long-term trend
-  Acceptance with great, short-term changeability of the portfolio and rollovers
-  Profit maximization in the long-term, minimization of the number of positions

Carry trading

Extremely long-term speculation technique, using interest rate differential. In carry trading a profitable rolling over the position is important. The higher interest rate differential and leverage, all the bigger profit. Annual differences in the interest aren't significant; therefore a manipulation of transaction size becomes necessary. Essential solid capital, withstanding dynamic rate fluctuations. Style for experienced Forex traders.

- Requires a combination of technical and fundamental analysis. Selection of strong long-term trend
-  Profits come from beneficial position changes and its everyday rollover
-  The widest loss rate
-  Horizon range orientated to a few months or few years
- Minimal spreads meaning, so finding the broker offer should be oriented on the lowest rollover costs, so-called swap points. Every intermediary provides their table

In conclusion

It is hard to find on Forex two identically thinking profiteers, and that triggers positive associations towards the use of technical analysis in everyday market activity.


Please enter your comment!
Please enter your name here