Sophia Todorova is the host of the live trading room for the London session. She has a background in teaching and psychology, and as such relishes the idea of assisting new traders on their journey to Forex trading success. Technical Analysis is her passion. The charts speak, and she listens. To Trade Live with Sophia Join Winners Edge Trading Premium Services.
In the quest to become a successful Forex trader, one of the major factors that have to be considered, is the trading strategy to adopt. While many people tend to be eclectic in their approach, there is significant potential for harm if this is done by a beginner trader who alternates between swing/ position trading, scalping, and day-trading. A trading strategy needs to be compatible with one’s personality type; Someone who is generally analytical, and needs time to decide on trades would probably not be very suited to scalping. Likewise, someone who has difficulty holding trades for extended periods could find it arduous to be a position trader. It is however, not uncommon to find experienced traders who are able to use different trading strategies without conflict.
For simplicity, I will briefly define three major types of Forex traders:
Scaper: The scalper focuses on 1-5 min timeframes, and usually aim for small pip-gain, up to about 10 pips at a time. He does this multiple times per day. Scalping requires speed in executing and exiting the trades. In scalping, the currency pairs traded are important, as the pip-spread tends to be larger on the exotics.
Day Trader: He holds positions within a trading day, with the intention of closing all positions by the end of the day. His major timeframes are the 5 minute, and 15 minute charts, and he targets between 10-50 pips at a time.
Position/Swing Trader: This trading style requires a larger risk tolerance, and as such, position sizes need to be adjusted to compensate for larger stop-losses. Pip targets for a position/swing trader are usually over 50 pips, and can be considerably more, depending on the trade setup. The 4-hour and daily timeframes are often used for trade entries.
Unarguably, it is necessary to try different trading strategies before making the decision to focus on a single one. This process usually involves a lot of ‘trial and error’, which is why I believe it is important to start one’s trading career on practice account initially, followed by a micro account. This will allow the new trader to increase trade sizes incrementally at his own pace. In this way he is able to grow according to his own learning curve without the painful experiences that can result from extensive losses.
No strategy is right or wrong, except as it related to the individual trader. Choosing the strategy that is right for you can mean the difference between a beautiful experience of learning while you develop as a trader, and one that is filled with disappointments and anxiety. Have you given any thought to this? Have you consciously considered which trading strategy might be the best one for you?
My last post was on a trade setup: http://www.winnersedgetrading.com/more-trading-opportunities-on-gbpchf/. Follow me on twitter to get updates on this trade setup.
Enjoy the rest of your weekend! 
