If you are new to foreign currency trading and exchange, you will quickly discover there are several trading styles. As every trader is unique, one style may work well for one person but not so much for you. Therefore, it is a good idea to try the different styles in order to find what works best for you.

In the beginning, it would be wise that you concentrate on only one style that fits you. However, as you gain more experience, you may find that more than one style may optimize your trading.

Understanding Trading Styles

Currency Trading styles include the following:

• Scalping. This is a style of Forex trading which involves getting in and out of trades for quick profits. Scalping is utilized by experienced traders. Sadly, most beginning traders are tempted into this style of trading, which is very risky. Scalping usually turns into a form of gambling for many neophyte traders, which ultimately leads to failure.

• Day Trading. In this style of Forex trading, open positions are usually closed at the end of the trading day. Since the Forex market is open 24 hours a day, 5 days a week, the "end of the trading day" is usually a term relative to each individual trader. It doesn’t necessarily mean 5PM EST. An advantage of this trading style is that it allows the trader to be alert during market hours, ready to take any necessary actions. Day trading also eliminates the risk of holding overnight positions.

• Swing Trading. This form of trading takes advantage of market "swings". In other words, the trader looks to buy when prices have reached support levels, and to sell when prices have reached resistance levels. Swing traders often have positions open overnight, but for less time than trend traders. That’s because they are looking to enter trades only during corrective market actions, not during significant market trends.

• Trend Trading. This is one of the most popular styles of Forex trading because it takes advantage of large, directional market trends, which can lead to significant profits. Trend traders usually employ trailing stops to maximize their profits.

• Carry Trading. This long-term style of trading involves opening a position by buying a higher-interest currency while selling a lower-interest currency. The goal is to generate gains from the interest rate differential, as well as to generate additional profits from the exchange rate between the two currencies.

Final Thoughts

When you decide you want to take part in Forex trading, study the various styles and begin with one that best matches your personality. When you and your trading style are in synch, your chances of achieving consistent profits from Forex trading are much greater.