Scalping is a short-term strategy that traders use to take advantage of the intraday price fluctuations. Scalpers go in and out of a trade quickly and repeat the process multiple times. They are looking for quick small profits that add up and eventually end up with a good gain at the end of the day.
Scalping usually focuses on the top currencies because of their liquidity and volume. Some examples are USD/EUR, USD/GBP, and USD/JPY.
Scalping eats a lot of time focusing on charts in order to take advantage of the rapid price fluctuations. This is why people who trade forex that uses this type of strategy limit the currencies they are watching to 1-2 pairs.
For people who can’t spend the entire day checking charts but don’t want to hold positions overnight, Day trading is an ideal trading strategy. Day traders open and close a trade on the same day. This minimizes their risk of big price changes that might happen when they are asleep. As a result, they are ready to end a trading day with a loss or a profit. Similar to scalpers, this type of strategy requires some time to check the trades regularly throughout the day because positions are ideally limited for minutes to hours. Also, they focus on building profits from several small trades.
Swing traders hold their positions for more than a day even lasting weeks. This strategy doesn’t require the traders to regularly check the charts because the plan is to hold it for several days. This type of strategy is ideal for traders that are busy with work and just trade in their free time. Still, like any strategy, it still requires some time to review the market. Trend trading, counter-trend trading, momentum trading, and breakout trading are common trading techniques used by swing traders (as well as certain day traders).
This type of strategy is ideal for traders who are looking for long-term price changes. The plan is to trade forex by holding the position for weeks, months, or even years as long as it can have a big price movement. Position traders often analyze and assess markets using weekly and monthly price charts, using technical indicators and fundamental research to find probable entry and exit levels. Position traders’ positions do not need to be watched in the same manner as other trading techniques since they are not concerned with tiny price changes or pullbacks; instead, they should be checked on a regular basis to keep an eye on the primary trend.