Trading Strategies Revealed

Nadia Jenkins

Forex Trading Strategies Revealed

Active trading on the Forex market is the act of buying or selling currencies on the basis of short-term movements, looking to benefit from rate movements identified on a short-term chart. What is most interesting about an active trader is that he/she has a completely different mentality and set of strategies from the more common Forex trader who looks to hold a position for the long term, through a buy-and-hold strategy. The mentality of the trader who buys currencies to hold over the long term is that they believe that longer-term price movements outweigh those seen in the shorter term, and which they believe should be ignored.

On the other hand, traders who use active Forex trading strategies believe that there are large profits to be made in capturing market trends and predicting short-term movements. There are several different methods through which traders execute active trading strategies, with each of them having their corresponding benefits and risks. The Forex trading strategies revealed in this article show common techniques used in active Forex trading.

Day Trading Strategy

Day trading is quite possibly the most common strategy that is utilized by active traders in the Forex market. In fact, many people in the trade use the terms day trading and active trading synonymously. As the name implies, day trading refers to the strategy where currencies are bought and sold within the same day. In this type of trading, positions are closed within the same day that they are made, with no positions held overnight. Initially, day trading was the exclusive preserve of highly experienced professional traders and market makers, but novice traders can now join in due to electronic Forex trading and the many available tools which help to analyze price movements.

Position Trading Strategies

Position trading strategies are actually considered by some people in the industry to fall under the buy-and-hold strategy rather than a true form of active trading. However, when utilized by a highly-experienced trader, a position trading strategy could be a kind of active trading. This strategy generally makes use of longer term charts – which could be anywhere from daily charts to monthly charts – in order to make trading decisions. What trend traders look for are successively higher highs or lower lows, which they use in order to determine the trend that a currency is moving in. They can then jump into the market and “ride the wave,” benefitting from both the currency’s upside and downside movements in the market.

Swing Trade Strategy

Typically, swing traders get into the game when a trend is broken. When a trend ends, there is typically some volatility in the market as a new trend starts to be established. Swing traders then buy or sell during this period of market volatility. Although swing traders in the Forex market often hold their trades for more than a day, these positions are usually held for a shorter period than trend trades. The swing trading strategy depends on a set of rules which could be based on either fundamental or technical analysis of the currency. These algorithms and rules are designed to help active traders in the Forex market to identify when they need to buy a currency or to sell. Although the algorithm that is used in the swing trading strategy does not need to be exact in predicting how high or low the currency’s value might move, it still depends on the market actively moving one way or the other.


Most active currency traders in the market use one or more of the Forex trading strategies revealed in this article. However, before engaging in any active trading strategy, it is vital that you explore and consider the associated risks and costs related to each one.