Monday 11 February 2008

Forex Scalping and Forex Swing Trading

Way back before Christmas (December 14, 2007) we looked at Forex Day Trading. This is the type of trading in which you enter and exit a trade within a single working day. This is the most common type of Forex trading so it was important to learn about this first. However, there are other types of trading. Two of the main ones are scalping and swing trading.

Scalping is the style of trading in which you take your profits after relatively small moves in the market. Your profits are usually smaller but they are taken more frequently, so potentially this style can be just as profitable as day trading. It can also be less risky because the time your position is exposed to the market is shorter, so there is less risk of adverse market events causing the price to go against the trade. Another advantage is that scalping works in any type of market, so you don't have rely on a trending market to be profitable.

Scalping doesn't have to be your only style of trading - you can use it to complement your other trading strategies.

Swing trading is a type of trade that follows a trend over a day or more. This way you can capture larger moves in the market, so your potential profits per trade are larger. You will usually want to set your stop-loss size higher than you would in day trading, to allow the currency room to move.

Swing trading is usually done by assessing charts over longer time frames. This means that you probably won't need to spend as much time in the day on your trading, so it may be more convenient and practical if you have other commitments.

Obviously this is a simplified description. If you are trading with Easy-Forex you will learn more about the different types of trading and they will help you decide which type suits you best. You can also find out more at http://www.bizwrite.co.uk/Forex/forexindex.html

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