Settlement of Trades

 

Each trader, from a newbie to a professional, should develop the most convenient and profitable trading system. Trading strategy is one of the basic elements of the trading system. Undoubtedly, there are many trading strategies at the international currency exchange Forex market, but it does not mean that each of them can be applied by all traders. Before the development of trading system a trader should define which strategy will be the most appropriate. It should save trader's time searching for the most applicable trading system. In order to decide on the trading strategy you have to take into account two factors:

 

1. Personality constitution

2. Internal constitution;

 

Financial capacities.

 

The major part of traders makes a great mistake by following unnatural for them trading strategy. The problem consists in the fact that the major part of traders, regardless of their trade experience, does not think about that. The second reason includes the problem of lack of financial resources to be able to choose the most appropriate trading strategy. Consequently, a trader does not have any other way except choosing the strategy which meets the requirements of small capital, not taking account of the first component.

 

We consider all trading strategies as follows:

 

Intraday trade

 

Adherents of this type of trade are mostly beginners; it is connected with currency market dynamics which attracts novices. Intraday trade has the following peculiarities:

 

• Positions can be opened during one trading day and by the end of the day they should be closed or, in case of urgency, transferred to the next trading day with setting protecting orders;

• All deals are short-term and meant for taking only some part of profit;

• During a day the number of deals can exceed one;

• Intraday trading does not require large financial investments;

• The time lag is min charts.

 

Intraweek trade

 

As a rule, traders, disappointed with intraday trade, try this strategy. Intraweek trade does not have strong market movement as intraday trade. It may seem that market is motionless. But it is just at first sight. Intraweek trade has some peculiarities as follows:

 

• A deal can remain opened for ten days;

• All deals are counted on taking the major part of profit on market movement;

• As a rule, not more than 2 positions are opened during a week;

• Requirements for invested funds are much higher than for intraday trading;

 

The time lag is multi-hours charts.

 

Positional trade in the direction of positive swaps

 

As a rule, positional trade is used only by patient traders. Positional trade is distinguished from the previous two by the pressure on a trader, and moreover, a trader has more free time. Positional trade has the following characteristics:

 

• The time lag is daily and weekly charts;

• A deal can remain open during months;

• Requirements for invested capital is the highest, compared to the intraday and intraweek trades;

• The variant of being outside the market during correction periods is possible.

 

Probably, every trader can find additional definitions of the strategies, but the basis is one of these strategies to become ideal for you. In order every trader to be able to choose the most appropriate strategy for him/her, let's consider which strategies are applicable to different characteristics of a trader. However, choice of a strategy is responsibility of traders.

 

At the beginning, let's consider advantages and disadvantages of the intraday trade:

 

Advantages

 

• Large capital is not needed;

• Trader may stop trading any time;

• Minimal risk;

 

Disadvantages

 

• High emotional pressure;

• It is required much time for refreshment;

• Lack of time during the trading session.

 

This strategy is suited for traders who are capable of a great endurance and have virile character, quick reaction and strong nerves.

 

Intraweek strategy

Pros

• Insignificant pressure;

• High profitability;

• Less time is required for refreshment;

• There is free time during the trading session.

 

Cons

• Significant volume of funds is required;

• A trader can be outside the market during the trend correction;

• Impossibility to stop trading at any moment;

• Necessity to hold opened position 24-hours.

 

This strategy is fit for traders who combine with such qualities as working capacity, deliberation and thoughtfulness, because first time trader will need to follow the positions 24 hours a day, analyzing all market changes. It is really timely at the moment of market trend formation. Meanwhile, usage of multi-hours charts will be uncomfortable for you due to signals which are formed on the night bars.

 

Positional trade

Pros

• Much free time;

• Absence of emotional pressure;

• Time is not needed for refreshment.

 

Cons

• Periods of absolute inactivity;

• Impossibility to stop trade at any moment;

• Limited number of currency pairs for trading;

• Necessity of large capital for trade.

 

This strategy is fit for traders who have a great patience, purposefulness and significant funds.

In case you achieved absolute coincidence of trading strategy, your character and financial capacities, it would be an ideal variant for you.