Overview of four popular trading strategies Scalping, Fading, Day Pivots and Momentum
Are you Forex Newbie? Then you will appreciate the overview of four popular day-trading strategies: Scalping, Fading, Day Pivots and Momentum.
All of these strategies focus on day trading. So trading within one day. One of the essentials of daily trading is to use as much capital as possible to achieve profit on small movements in the price of highly liquid currency pairs.
How to do it?
Some assets are excellent candidates for daily trading. A classic “day” investor follows primarily 2 indicators – liquidity and volatility. Liquidity, often characterized by narrow spreads and low slip (Slippage), allows you to open and close a purchase at a bargain price. While volatility is the expected daily price range – the range with which the investor trades. The greater the volatility, the greater the opportunity for profit, but also the loss.
Which financial instruments to use?
The intraday candle charts is candle charts provide cost analysis and are an important help for every trader. Here you will find a strategy using candlelight knots.
Current news, any event, whether happening in the anywhere in the world, can drive prices. Therefore, it is always good to keep the image read by financial and investment newspapers.
Scalping is one of the most popular strategies among newcomers on Forex. The goal is to sell the currency pair as soon as we have achieved the minimum profit. Here you can read about scalping in detail.
The essence of the Fading strategy is to take a short position. That is, sales of currency pairs, whose price rises sharply upwards. The sale of such assets is based on our assumption that the units of that pair have sold too much and traders owning these currencies are ready to sell them. The Fading strategy therefore consists in selling couples whose price is still rising, but we assume that this trend will soon turn. Fading is one of the most risky strategies, but it can reward remarkably. More about Fading here.
This strategy is based on gains from currency pair volatility. It is necessary to try to buy the currencies at the lowest price of the day and on the contrary to sell them for the highest. It is therefore necessary to monitor the signals that indicate that the price is in the desired position.
Strategy Momentum implies tracking news and reports from the world of finance and forex and based on them to predict the rise or fall of currency pair prices. It’s about capturing the trend and taking advantage of it until signs show that the trend will soon turn.