After learning the basics of forex trading, it is important to understand the multiple forms of trading that are employed by different investors, some who are among the richest people in the world. Before giving money to your forex broker, look through these styles and find one that matches your intended goals and means.
Fundamental Analysis Trading: This is the most basic type of trading and involves looking at actual real-world events and analysis to predict how the forex market will respond. It involves using intuition to make decisions rather than data. Many trading styles fall into specific sub-categories of Fundamental Analysis Trading.
Technical Analyst Trading: Unlike Fundamental Analysis Trading, Technical Analyst Trading desires to use the most advanced measures of data to predict the market. It relies on hard facts rather than intuition. This may seem superior, but graphs and data designed to predict trends can be just as wrong as human intuition.
Range Trading: A trading style that aims to profit from the purchase of technical levels of support and then sell technical levels of resistance. The range is defined by the resistance of the upper level and the support of the lower level.
Scalping: Similar to the way people outside of sporting events operate, this method involves making many small trades within a short period that accumulate in value over time. Instead of staying with one currency and hoping it increases, this style rides small waves and sells before they dip. Trades can last seconds to minutes. The preferred method of day traders.
Swing Trading: This style attempts to profit from short to medium market swings. Trades typically last between hours to days.
Position Trading: This is for the forex trader who hopes to make a profit over a long period of time by sticking with a single trade. Can last from a few weeks to several months.
Discretionary Trading: Human judgment is required for every transaction.
Auto Trading: Either an automatic forex trading platform or pre-programmed strategy is used to determine the best ways to make money. These programs are designed to use data in order to predict market trends and do not require human decision making.
News Trading: A style where traders use current news announcements in order to guess how a countrys currency will react. Examples of pertinent news stories include natural disasters, financial collapses, and major political changes. This strategy seeks to gain short-term profits immediately following dramatic news stories.
These forex resources are a few of the most popular methods of operation for forex trading. If you are really serious about getting into the world of FX trading, begin with a forex demo account, available on most forex websites.
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