The Best strategy on XM MT4 and MT5. Day, Swing or Position trading?

Various types of trading strategies

It is often said that no one is the same trader. Each trader has different personalities and characteristics, which influence the performance of the trade. Needless to say, lifestyle differences can also affect the type of trading strategy you implement.
For example, some traders are ambitious and not afraid to take huge risks, while others are conservative and want to take good positions. There is no right or wrong trading method in this regard. And as a trader, it is very important to understand which strategy type is best for you.

As mentioned earlier, there are many factors to consider when deciding which type of trader you want to be. By first deciding whether you want to trade full-time or part-time, you can decide on a trading schedule and how long you can hold your position. Next is the risk tolerance, which outlines the number of trades you can make each day, the profits you earn, and how you limit your risk. It also helps to assess your trading knowledge and experience.

So this is the type of trader.

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1. Day trader

As the name implies, day traders hold positions for one day. Day trading includes short-term trading, but its pace of activity is not as fast as scalping. Day traders can open some positions for several hours, but usually prefer to close a trade in a day.

This type of strategy is suitable for those who can check their position on the monitor and make the necessary adjustments all day or during the witness. Fundamentals work on this type of trade, so you need to follow the economic report published today or the headlines that affect your position.

Inflections during the trading period are also important to consider, as the date trader can see the average trend of a particular currency pair to predict whether the reversal or continuation is normal.

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2. Swing trader

Perhaps already speculated, swing traders hold positions for more than a day and focus on mid-term timeframes such as 4-hour or daily charts. This usually involves trying to identify an ongoing trend, namely the ceiling and bottom of the market.

As a result, swing trading requires more patience than scalping and day trading. This also means that it may be necessary to set a larger stop-loss line, accept towards larger targets, and often deal with the noise generated during trading that can lead the position to a deficit for some time. Means

Swing traders usually secure a small number of positions compared to scalpers and day traders. This allows you to choose a setup that is likely to be more profitable than having multiple setups at once. Reading and technical tools such as leading and lagging indicators are often applied to assess the start and endpoints of a trend.

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3. Position trader

The last position trade we’ve covered requires the most patience of any trading style we’ve covered, as it requires trading for weeks and months. Spreads and transaction fees are no longer considered to be so bottom line related, but the most important things to consider are carryovers and rollovers.

The broker applies interest determined on the basis of the benchmark ratio provided by the central bank to positions that are open across days. It is important for some position traders to maintain a positive carry that can generate profits, that is, to manage high-interest rate currencies against low-interest rate currencies.

Despite holding a position for a long time, position traders need to check trades frequently to identify opportunities to maximize success. A good understanding of economic and market principles can be the most powerful tool for position traders, as fundamentals play an important role in determining longer-term price trends.

Position trading requires a certain amount of resilience, as a large amount of stop-loss is required to continue long-term trading. It means that you need to use filters to remove the short-term noise that causes heavy pullbacks and keep an eye on the big trends.

In addition, position trading requires a large amount of capital that can survive the rebound of stock prices of hundreds of pips without receiving a margin call. If you are the type that is easily influenced by the reputation of various markets that can cause you to panic or give up your position immediately, you may need to consider changing to a short-term trading style.

Be a Position Trader of XM