Traders divide trading operations into 3 types of trading: short-term (“scalping”), medium-term (day to week) and long-term (from 1 month or more).
Each of these types has its advantages and disadvantages. Scalping is based on making a profit from minor fluctuations of the currency pair in a few “pixels”. These trading operations are possible only if there is no spread by the dealing center when opening an order and using take profit to be mandatory.
The choice of short-term trading depends on the trader’s ability to participate in trading for a long time, make decisions within a few seconds, and from the desire to make a profit in a short period of time.
Medium-term trading is based on the expected trend movement during the working day or week. This strategy is based on technical analysis, possible changes in quotations after the announcement of statistical data, decisions of the Central Bank and the Fed, which are scheduled for the designated period. This trading involves placing “stop losses” and “take profits” with a significant margin to obtain the maximum possible profit and eliminate the likelihood of an accidental triggering “stop loss” with minor market fluctuations.
Medium-term trading allows you to more thoroughly conduct technical analysis and select a currency pair, but it requires a long exposure, a strong nervous system, waiting for exactly the direction of the market movement that was chosen.
Long-term trading in its strategy is based on the estimated global economic and political events that should occur or have already occurred, affecting the movement of currency pairs in the expected direction. When using a long-term trading strategy at the time of opening the order and throughout its existence, take profit is not used at all. When the exchange quotes move in the selected direction, the “stop loss” is pulled up (reinstalled) with a considerable margin, which excludes the premature closing of the order following the trend movement.
Long-term trading allows you to get a significant profit from 1 order and is guaranteed to avoid losses, but this strategy creates the danger of missing the highest point of possible profit.
Long-term trading with a large enough deposit implies quiet daily work on trading floors and obtaining significant profits from one or two orders. One open large order is preferable to one hundred small ones.
Most of the traders use all types of trading at the same time, as a way to constantly monitor the situation, the possibility of obtaining additional profit in any fluctuations in the course. Various trading strategies make it possible to keep abreast of investors’ moods and emotions.