Trading Styles and Setups

One of the major reasons that forex trading has such a wide appeal is the presence
of different trading styles that can be applied. Those traders looking for very quick
moves can adapt scalping strategies and tactics. A great portion of forex traders
put on trades that have moderate-size intraday durations that allow the currency pair to
move through a range. These traders go for 10 to 30 pip moves. Multiple day trades allow
for larger profit objectives of 100 pips or more. Forex trading can also include the goal
of trading for income. This goal is featured in carry trades and is a dominant strategy
of large hedge funds and institutions. But carry trades are also possible for the average
retail trader.
The beginning trader should explore many of these styles and strategies by creating
trading setups that use a combination of technical indicators, and chart patterns to pinpoint
conditions for a trade. Table 14.1 provides a matrix for grouping the strategies and
the appropriate technical analysis tools to implement them.
As we can see, there is no single style of trading, nor any one technical indicator
or methodology that will be sufficient. Successful trading of forex is a combination of
fundamental knowledge, technical tactics, and experience in pattern recognition. While
there are many paths to success once you choose a particular style, there are setups that
have proven successful for each style as summarized in the matrix above. Let’s discuss
each one with some illustrations of their application. The order of these styles does not
reflect any priority. All the styles are valid for use in forex trading.


By ABE COFNAS