Forex trading is considered as the biggest and the most liquid of all financial markets. Present records show that there are more than $13 trillion being traded in the spot market alone. Because of its high potential for profit, there are many types of market participants in currency exchange. In the world of financial markets, forex trading is assumed as the biggest one. It is also considered to be the most liquid since you could easily cash in your investments.
The types of forex traders could be classified based on the strategies used. There are two types of online forex trading; scalping and swing trading.
Scalping is done by scalpers. Scalpers are those who trade in a kind of huge amount of trades, such as hundreds or thousands trades each trade in order to benefit from the spread of bid-ask. Scalpers get their profit mostly from steady currencies that are stagnant or have no movement at all or turbulences. The usage of leverage account will benefits the scalper since they could buy in the bid price and sell in the ask price. Volumes are the weapon of scalpers while trading. The bigger amount of the trades, the more profit will be cashed in by the scalpers.
Scalpers and market markers has the similarity of controlling the market by their strategy. However, there is a slight difference; a market marker will be taking part as a dealer and able to trade higher than most scalpers. Still, both of them compete for profits. Somehow, market maker is still on top since they have the tool to help them close the deal while there is high speed trade. Also market maker could get first hand information to help them execute the transaction and close the deal.
Swing trading is pictured as a fundamental trading since they will continue holding the position for more than 24 hours. This condition is due to the belief of swing traders that they will wait for significant price to get high profits. Therefore they need careful act before executing the deal. The difference from scalping, swing trading is trading in lower volume and they wait for the price changes at least 1 pip to get enormous profit. Patience, that is what is needed by swing traders because it might take weeks or months to hold the position based on the market’s situation.
Swing trading is all about determining the right currency to be paired together. The right pair will gain high profits. EUR/USD, USD/EUR, CAD/USD, SGD/USD, USD/SGD, AUD/USD are some pairs that are considered to be great currency pairs. Those pairs are quite dynamic and active; therefore it will be easy to be monitored.
Swing trading is all about positioning. Positioning in the right market is the answer. A raging bull market or a bearish market is surely not good for swing trading since the turbulences will cause the currencies to have wild movement. When the market is stagnant, a swing trader could be working easily. A stagnant market is easy to read, so a swing trading can be run.