Trading Strategies
You'll Master: Scalping, Swing Trading, Position Trading & Day Trading
What is a Trading Strategy?
A trading strategy is a structured set of rules that helps traders decide when to enter and exit trades in the Forex market.
Having a strategy is essential for staying disciplined, managing risk, and avoiding emotional decisions.
In this lesson, we’ll explore three core strategies; scalping, swing trading, position trading and day trading.
Each approach suits different trading styles, time commitments, and goals.
1. Scalping
High-Speed Trading:
Scalping is a fast-paced, short-term strategy where traders aim to profit from tiny price movements by making many trades in a single day.
Trades typically last seconds to minutes.
Key Features
- Duration: Seconds-minutes
- Profit target: Small (e.g., 5-10 pips per trade).
- Frequency: Very high (multiple trades daily).
- Focus: Quick reactions to small price changes.
Advantages
- Quick profit accumulation
- Works in flat markets
Challenges
- High transaction costs
- Demanding focus required
2. Swing Trading
Medium-Term Approach:
Swing trading is a medium-term strategy where traders hold positions for days to weeks, aiming to capture “swings” or price shifts within a trend.
It balances time commitment and profit potential.
Key features
- Duration: Days-weeks
- Frequency: Low (a few trades per week).
- Target: 50-200 pips
- Focus: Identifying trends and price reversals.
Who It’s For:
- Part-time traders who can check the market daily.
- Those who prefer larger profits over quick wins.
Advantages
- Less time-intensive than scalping.
- Bigger price moves mean fewer trades with higher rewards.
Challenges
- Overnight risk (e.g., price gaps from news events).
- Requires patience to wait for setups.
3. Position Trading
Long-Term Strategy:
Position trading is a long-term strategy where traders hold positions for weeks, months, or even years, focusing on major market trends driven by fundamental factors like economic data or interest rates.
Ideal for:
- Patient traders
- Fundamental analysts
- Those with limited screen time
Key features
- Duration: Weeks to years.
- Frequency: Very low (a few trades per year).
- Target: Large (e.g., hundreds to thousands of pips).
- Focus: Fundamental analysis (e.g., economic trends, interest rates).
Advantages
- Minimal time commitment (check weekly/monthly).
- Captures significant trends with high profit potential.
Disadvantages
- Requires patience through short-term ups and downs.
- Larger stop-losses need a bigger account size.
4. Day Trading
Intraday Strategy:
Day trading sits between scalping and swing trading.
Traders open and close all positions within a single day, avoiding overnight risk, and aim for moderate profits from intraday price moves.
Key features
- Duration: Minutes to hours.
- Frequency: Moderate (a few trades daily).
- Target: 20-50 pips per trade.
- Focus: Capturing price moves within the day.
Ideal for:
- Traders who can dedicate a few hours daily but want to avoid overnight risk.
Advantages
- No overnight exposure to market gaps.
- Clear focus on daily price action.
Disadvantages
- Requires active monitoring during trading hours.
- Limited time for trades to develop.
5. Risk Management Essentials
Capital Preservation:
Protect your account with disciplined risk controls
Three Pillars
1-2% Risk Per Trade
Stop-Loss Orders
Position Sizing
6. Choosing Your Strategy
Scalping
Full-time traders
Fast-paced action
Swing Trading
Part-time traders
Moderate commitment
Long-term focus
Fundamental analysis
Practice Zone
Homework:
- Test one strategy on demo account
- Analyze 10 trades
- Track daily results
Next Step: Try one strategy in a demo account this week!