When investors are looking for the right place to put their money to work, there are many choices of varying degrees of risk and potential reward. You can invest in stocks, bonds, money instruments, commodities of many types, derivatives and then there is the Foreign Exchange Market (Forex). When you trade in the Forex, you are dealing with the trading of foreign currencies.
Before an individual starts venturing into the Forex, they may want to consider two things. First, it would be wise to fully understand the rules and nuances of this type of trading before you start investing hard earned cash. You should get good forex education and practice for the best results (checkout iforex education for more info). The second consideration is choosing the type of trading that will best serve you as you strive towards your financial goals. Here is a summary of some of the more popular “styles” of trading used by traders all over the world.
This is perhaps the most conservative approach to trading. Investors will establish long-term positions through the buying or selling of particular currencies. This is referred to as having a position. They will maintain these positions for months or even years. The goal is to insulate themselves from short-term volatility and focus on long term prospects.
Swing traders will take a look at possible economic trends and news due out in the coming weeks and establish short-term positions based upon what currencies will me most likely be affected by the upcoming events. These trades tend to be made over a few days up to several weeks.
These traders will use charts and daily economic news to open positions at the start of the day and then close those positions before the markets closes each day. They are speculating on price movement each day while insulating themselves from overnight surprises.
This is referred to as “inter-day” trading where many trades are made each day trying to secure small profits from moves within a currency over a few seconds or minutes. This is highly speculative trading.
They trading of world currencies can be fun and exciting. With many styles to consider, you should try to find one that best suits your personality and needs. As with any type of investing, there are risks to consider. You should never invest more than you can afford to lose in assets.