There are many forex trading strategies and styles available. Finding the right strategy and style that suits your requirements and expectations are very important for trading success. Below are some of the factors you should consider when choosing a trading style.
- Time, Patience and Risk Tolerance: How much time you can invest in trading and how much patient you are two most important factors. Those who have time and patient can be better in trend trading and those who are short can be good in fading and day trading.
- The timeline you are opting: Trend traders typically choose long-term trading frames because trends tend to develop in weeks or months; and faders and day traders typically choose short-term trading frames because they look to profit from market volatility.
- Type of Analysis and indicators you are familiar with: There are two general classifications of analysis tools – fundamental and technical analysis. Although their advantages over the other is always a hot debate, fundamental analysis tools generally help long-term traders and technical analysis tools help short-term traders. Also fundamental tools are better suited for trend trading and technical tools are for day trading and scalping.
- Knowledge of different trading strategies and indicators: Most traders only need a handful of trading strategies and indicators to find good trading opportunities but the knowledge of many different strategies and indicators can help them to profit or limit risk in some specific market conditions.