Trade ideas and trading strategies help the traders to buy or sell different currency pairs and securities after analysing the price movements in the Forex market in order to gain good returns on their investments. One of the most important trading strategies is active trading strategy that is fully based on the short term movements. The approach and style of this trading strategy is quite different from long term or passive investors.
The traders who opt for an active trading strategy for Forex trading believe that they can make good profits by capturing market trends and short term movements. Such traders are known as active traders. There are a number of ways through which an active trader can easily accomplish active trading strategy. All these methods provide an appropriate market environment to the traders and also eliminate market risks from trading.
The four most common active trading strategies that usually take into account for both entry and exit signals are as follows:
It is a well-known trading style for active traders through which they can buy or sell different currency pairs within the same day. As its name indicates, all the trade positions are closed out within the same day in this trading strategy. There is not a single trade position to be held overnight by the traders.
Day trading is one of the fast paced and most exciting ways of trading style. Traditionally, it can be done by the expert professionals and market specialists who have good expertise of Forex trading and a vast experience of the Forex market.
- It helps the traders to quickly grab the volatility opportunities in the Forex market.
- It reduces the risk factors that are associated with the capital investment and subjected to pre-market and post-market price movements.
There are some considerations according to which some traders think that it is not a type of active trading strategy and termed as a buy and hold strategy. Nevertheless, when this trading strategy is performed under an advanced and experienced trader, it can be a form of active trading.
Position trading is one of the easiest and stress-free trading styles than other methods of active trading. This type of trading style uses long term charts and other methods to define current market trends and market direction. It may last for a few days to a few weeks and it totally depends on the market trends.
- The traders can implement trading strategies with low leverage through this trading style.
- It is used to indicate trading signals to the traders with the help of technical analysis tools.
The price volatility occurs in the market when a trend breaks or ends as the new trends try to establish a price. The swing traders buy or sell those trends as per their price volatility in the market. These types of trends are held for more than a day in swing trading but for a shorter period of time than trend trades.
- This trading style is able to generate huge returns per trade.
- The traders are able to trade even if the markets are closed in swing trading.
It is a quick trading strategy that is followed by active traders and it is used to identify and exploit bid ask spreads. The scalpers are always in search of capitalizing small moves with measured transaction volumes.
- There is no need for strong technical skills to use this trading strategy.
- The scalpers can do profitable trades with small price movements of different securities and currency pairs.