When you look at trading on the foreign exchange market you have to consider what your trading style is. There are a number of points that you have to consider when you look at your foreign exchange trading style. You have to consider the timeframe you are comfortable in, the strategies that you are going to be using and the type of analysis. When you have considered all of these aspects you will be able to determine what your foreign exchange trading style is.
The Timeframe You Trade In
There are three different timeframes that you can trade in. These are long, medium and short-term. Before you start looking at anything other aspects of trading you have to consider which timeframe you will be comfortable with. Short-term trading is also known as day trading where you do not hold a position for more than a day and never overnight. Medium-term trading will have trades that last more than a day, but less than a week. Long-term trading includes traders which last more than a few days and up to a month.
It is very important that you determine the timeframe you are comfortable with as this is the basis of your trading style. The timeframe you are using will also affect the other aspects of your trading strategy.
The Foreign Exchange Trading Strategy You Use
Once you have determined the trading timeframe that you are comfortable with you have to look at the strategies. Each timeframe will have different strategies that you can use and you should know about them. The points that you should consider in the strategy is the currency pair you will be trading and the theory that you are trading on.
It is important that you understand the strategy that you are using. If you do not understand why you are going to do something then you are going to have a problem implementing the strategy. You should also consider if you want to trade with the trend, against it or in the range. You can use these types of strategies in all the timeframes, but you have to know what you are comfortable with first.
The Type of Analysis You Are Using
There are two types of analysis that you can use on the forex market and they are technical and fundamental. When you use technical analysis you will be using the charts and indicators to determine when and how to trade. With fundamental analysis you are going to be looking at news and events to determine what the market will do and when to trade.
The rule of thumb when it comes to analysis is that you use technical analysis for short-term trading and fundamental analysis for long-term trading. Of course, you can use fundamental analysis for short-term trading and technical analysis for long-term trading. To determine which analysis method to use you should consider what you are comfortable with. There are some people who cannot determine what the news is telling them while other people panic when they are faced with a chart and indicators.