Forex Trading Styles

Every businessman has his own way of conducting his work, and so do forex traders. Their trading plan is also based on their own style, and this has to be the case, because a strategy that does not jibe with your personality will simply not work. The key to success in the forex is having a plan you are comfortable with.

It is easy enough to determine your trading style. It consists of asking yourself a few questions, and also taking into account the kind of trading that you can do.

For instance, you have to ask yourself how much time you can afford to give to forex trading. If you have a full time job and family obligations, then obviously your trading sessions will be limited. If this is the case, and you also are not the type who likes to crunch chart data all day, then position trading might be for you.

In position trading, you will be holding on to your position for weeks or even a couple of months. What you will be looking for here is the long term. If you want to try this out, part of your forex strategy should include patience. Do not try to make any rash moves if the currency records a sudden surge (which in all likelihood is just a market reflex action).

If you want to seek profit in the short or medium term, then you can be a swing trader. Here the position is held for a few days. In this case, you will generally spend at least a couple of hours, (more if possible) on getting yourself up to date on the pertinent news and actual trading.

A day trader is suitable for those who like it fast; usually positions are held for only a few hours each day. The potential for profit is quickest here, but it is not for everyone. Because positions are only for the short term, one has to make quick decisions, and the pressure can be immense.

Some also make a distinction between a system trader (someone who relies on forex technical indicators) and discretionary traders (those who prefer to work with fundamental analysis). However, it would be more preferable if the trader incorporates both into his trading style.

Although most of the technical calculations are done by computer software, it still pays to be aware of how the technical tools work in case they issue conflicting signals. Here knowledge of the economic issues affecting the forex currency will come in handy.

Performing an evaluation of your trading style is essential to becoming a successful forex trader. By understanding your capabilities and limitations, you will be in a better state of integrating your persona with your trading system.