Lesson 25: Scalping, Day Trading, or Swing Trading?

There are different ways to approach trading, especially depending on the different time horizons. In addition, the amount of time you want to trade will largely determine the type of trader you will represent.

Scalping

Scalping involves speculating on small currency fluctuations, typically 3 to 10 pips, sometimes 20 or 30 when volatility is very high. "Scalpers" do not take fundamental analysis into account, but may take positions following violent reactions to currencies in the face of statistical publications or influential statements.

The strategy of the sclapeur is therefore basically based on the technical analysis of the forex , generally on charts of 1 to 5 minutes . The number of orders placed during the day is very high, and the leverage is important, so that the reduced targets in terms of pips lead to significant capital gains.

Scalping is considered the most risky type of trading in the currency market , and requires a lot of reactivity and attention to cut losses quickly, and is therefore reserved for experienced traders.

The intense follow-up and of every moment that the scalping requires requires to have the eyes riveted on the screen throughout the positions taken, which can be very stressful.

However, this technique can be tailored to those who want to trade a few hours a day, and complete their trading session without open positions.

summary

Graphics to use: 1M, 5M, 15M 
Number of positions: 10 to 50 per day 
Earning goals: 3 to 20 pips

The day trading

Day trading consists in keeping its positions from 15 minutes to 1 day, 2 days. Day traders are also basically based on technical analysis , but take into account fundamental analysis and topicality in their decisions .

Day traders study graphs from 15M to 4H, and their earnings goals are around 50 pips in general. Day traders are less obliged to follow their positions intensely than scalpers, and generally use stops and limits, allowing them to place their orders and then move on, leaving the output of positions to be dictated by Stops and limits .

This is the most common type of trading among independent traders, and this is the type of trading by which beginners should begin.

summary

Graphics to use: 15M, 1H, 4H 
Position number: 3 to 5 per day 
Earning goals: 50 to 100 pips

The Swing Trading

In position trading, one seeks to retain positions from several days to a few weeks. If technical analysis is always used in the decision-making process, the position trader attaches great importance to fundamental analysis, to current events and market psychology , as well as to the "atmosphere of the moment" .

The charts studied are usually daily charts, although hourly charts can be used to refine inputs in position, and weekly charts to step back on the background trend. The winning goals here are very high, and are counted in hundreds of pips .

This type of trading is not advisable for beginners. First of all, it may be difficult to understand the fundamental context and the psychology of investors when one has no experience. Then, the few positions involved in this type of trading induces a slower acquisition of experience (the less we take positions, the less we acquire experience, it is mathematical).

summary

Graphs studied: 1H, 1D, 1W 
Number of positions: 1 to 10 per month 
Earning goals: from 100 to 1000 pips

To conclude, it should be noted that the first contact of a beginner with trading should be through day trading.

Scalping, although risky and requiring high resistance to stress, may also be suitable for beginners if the positions taken remain modest .

Indeed, the first goal of the beginner is to gain experience , and the more orders you make, the faster you gain experience. Moreover, the constant monitoring of the positions implied by scalping makes it possible to imbibe market reactions, which also greatly helps in the acquisition of the experience.

Finally, position trading, which requires little time for high gains, seems not very suitable for forex. Indeed, the currency market is a market on which everything evolves very quickly, and to think to be able to retain positions for several weeks requires to rely on a considerable amount of uncertainty.

It is also not essential to "choose one's camp", you can very well have at the same time day trading positions, and "scalp" the market from time to time, while taking a "bet" on the long Term trading with position trading.