Types of Short Term Trades

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In the forex market, you can either be a casual trader or a serious investor. What separates one from another is only the time. The style you choose is directly correlated with the time you devote on the trading operations of the market. In this article, we will be going to discuss the short term style of trading. Here is a quick overview:

 

Short Term Trades

 

  1. Scalping
  2. Intraday Operations

 

Scalping

 

Characteristics

 

  • The operator open and close positions within a short period of time, from seconds to minutes
  • Scalpers tend to make several operations in one day, some come to make around 100
  • Seek small gains each operation (10, 5 or less pips). The losses are minimal.
  • These operators usually make large trades on short-time charts, i.e. 1 minute, 5 minute, etc.

 

Advantages

 

  • Minimal risk per trade
  • Usually these systems are highly effective
  • Does not require fundamental analysis
  • No market risks outside the operation hours
  • Usually there are many opportunities every day

 

Disadvantages

 

  • High levels of emotional stress and psychological pressure
  • The chosen brokers should have a rapid and consistent execution (try ETX Capital)
  • Most brokers do not like scalpers
  • High transaction costs.

 

Intraday Operations

 

Characteristics

 

  • All operations are opened and closed on the same day, with each lasting few minutes to hours.
  • This type of operations require a high level of discipline and patience to wait for the right time to enter/exit market.
  • Most of these operators rely on technical analysis.
  • The operating frequency can go from one to five times a day.
  • These operators try to capitalize on the trend of the day.

 

Advantages

 

  • Potential Good profit
  • Intraday traders can use a good RPR
  • Can capitalize on short-term trend
  • No risk “overnight”
  • There is always an opportunity to make money

 

Disadvantages

 

  • It requires a systematic approach
  • Requires a high level of discipline and patience to operate intraday
  • Need to use different strategies for different market conditions
  • It requires constant monitoring to fundamental announcements
  • Often much “noise” in the intraday market.
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Deepak Tiwari, a law graduate, has been working as a journalist for six years now. He currently writes on Bitcoin, economic, and Forex related news at ForexMinute, the brand new financial news portal which is making waves among Forex traders around the globe for the innumerable Forex resources it offers for readers, traders and brokers. His other specialties include writing on law & governance, finance, internet marketing, careers, politics, international relations & diplomacy, etc.