Most trading strategies use Technical Analysis, but some use Fundamental Analysis. The following are various trading strategies that are commonly used:
NEWS TRADING Trading using news. Traders can profit by anticipating or trading in response to the impact of economic events.
MACRO TRADING This type of trading relies heavily on Fundamental Analysis. Traders will look at fundamental economic indicators (i.e. macroeconomic data) to try to understand the strength of a currency relative to other currencies.
CARRY TRADE Carry trade tries to get profit by taking advantage of differences in interest rates between countries. Typically, currency bought and held overnight will generate bank interest in the country in which the currency was purchased. Traders can search for the currency of a country with a low interest rate to buy the currency of a country that pays high interest rates, thus benefiting from the difference.
SCALPING In this trading strategy, the trader opens multiple trading positions and tries to get a small profit from each trade. Scalping is one of the fastest trading strategies. Scalpers strive to hold their position for a short time, thereby reducing risk.
DAY TRADING Day trading is perhaps the most well-known trading strategy. Day trading, as the name suggests, is a method of buying and selling within the same day. Positions are closed on the same day they are taken, and no positions are held overnight.
SWING TRADING Swing trading is a medium-term trading strategy. Trading positions are often held for more than one day to one week. Traders will be looking for opportunities to trade the "swing high" or "swing low" over a period of time. This strategy is able to filter out some of the "noise in price movements, as seen in day trading. This makes the swing trading strategy an excellent choice for newbie traders who are just starting out in trading."
POSITION TRADING Position trading is a long-term trading strategy. This type of trading can last from a few days to several weeks and sometimes longer, months or even years. Traders who use this strategy usually rely on Fundamental Analysis along with Technical Analysis. This type of trading may require a higher level of patience.
TREND TRADING or TREND FOLLOWING Trend trading is one of the most popular and common trading strategies. This strategy attempts to identify an uptrend or a downtrend and select trade entry and exit points based on that trend. In Trend Following, traders will hold their trading positions until the trend ends.
RANGE TRADING Range trading is a popular trading strategy based on the idea that prices can often stay within a predictable range over a period of time. This strategy works well in sideways markets. Traders rely on the ability to frequently buy and sell at predictable highs and lows of resistance and support, sometimes repeatedly during one or more trading sessions.
TRADING MOMENTUM Momentum trading is a strategy to catch a strong price movement in a certain direction, which is an indication of the possibility that the price will continue in that direction.
