In today forex faq, we have a question from one of our fellow traders asking me about the selection of strategy to trade.
Below is the question:
There are a lot of strategies (e.g. Scalping, Trending or Swing) in the market but I am confused which one should I trade with.
Can you give me some advice on this topic.
Indeed, there are quite a number of trading methods and style in the market and as a new trader, you will be very confused as to which one should you use.
There are a few things you have to bear in mind when selecting strategy to use.
1) How long you want to stay in trade
For some traders, they simply want to stay in the trade within day while there are some who want to exit a trade within minutes and there are some who is willing to stay in a trade for days.
Therefore you have to first decide how long you wish to stay in a trade before you can decide which trading style to adopt.
One thing you have to take note is that the long you stay in a trade, the more profits and higher risk reward you can get.
A scalping strategy allows you to exit a trade within minutes but it always give you 10 to 20 pips profits.
A intraday strategy or trades that last a few days can gives you 50 to 300 pips profits at times.
So spend sometime to ask yourself how long you want to stay in a trade.
2) How much time you have to look at chart
Another factor you have to take note of when selecting a trading style or strategy is the amount of time you have to look at your chart everyday.
If you have a lot of time to look at your chart everyday, you will be able to trade off the lower time frame and therefore you can do scalping or intraday trade.
However if you only have limited time to look at your chart, you can consider taking up strategies that allows you to trade off the higher time frame.
3) Frequency of trade
The last factor you have to consider is the frequency of trades. I understand that there are a lot of you guys who are eager to get into trades everyday.
Therefore understanding your own trading needs is very important. If you want to get into several trades per day, then scalping is suitable for you.
However if you do not mind getting into a few trades per week, then day trading or long term trading is suitable for you.
Personally, I am only looking for profits in trading and therefore I do not care about the frequency of trades. For me, I dun mind having 2 to 3 trade per month as long as they give me high risk reward and good winning percentage which translates to profits in the end.
So ask yourself which types of strategy is suitable for you and then start to learn the right strategy for yourself.