Trading Styles Strategies

Day trading is a short term trading strategy, involves buying and selling of financial instruments within a day, to profit from small movements of price. Before you continue reading about day trading, you can improve your forex trading skills by reading our other article on "What is Forex". Day traders need to be continuously focused, since markets, such as the oil market can move suddenly in the short term. Hence these strategies are particularly effective in volatile markets.

A Carry Trade is a trading strategy, which is borrowing at a low interest rate and investing in an asset with a higher interest rate. In other words a carry trade is most of the time based on borrowing in a currency with a low interest rate and converting the borrowed amount into another currency (if you are new to Forex trading, you can start with the basics, “What is Forex trading”). And, of course, this method can be used on stocks, commodities, real estate and bonds that are denominated in the second currency.

Forex hedging is a method of reducing a trader's losses by opening one or more foreign exchange transactions that offset an existing position. The purpose of hedging is to reduce the risk to some extent. If you are new to Forex trading, you can read our another article about “What is Forex trading and how does it work”.

Diversification is a golden rule in trading, which is the basis of basket trading strategy. In other words, don't put all your eggs in one basket.

Buy and hold is a passive investment strategy where a trader buys stocks, currency pairs or other types of securities such as ETFs and holds them for a long period regardless of short term fluctuations in the market. The idea behind buy and hold strategy centered on long term tendencies. If you are new to Forex trading, it is best to start with the basics, “What is Forex”.

Pair trading is a trading strategy that involves matching a long position with a short position in two stocks with high correlation. Strategy is based on the historical correlation of two stocks. The stocks in a pairs trade must have a high positive correlation, which is the driving force behind the strategy’s profits.

Swing Trading is a long term trading strategy, when trades are kept open from a few days to, sometimes, several weeks. Swing trading strategy’s essence is taking advantage of market big fluctuations "swings". Fundamental analysis plays an important role on longer timeframes. But before we start, if you are new to Forex trading, you can start with the basics, “What is Forex”.