In recent trading times, more and more traders are switching to forex day trading as it promises more immediate profits. However, what most traders miss these days is that it is more important to get consistent profits instead of just immediate gains. But why not have both if you can?
Wise traders now think of combining short term with long term forex trading strategies. Before you reap the benefits of such a combination, it is important to understand both forex trading strategies.
Day trading is a form of short-term trading wherein the same currency you buy are also sold before the market closes for that day. If you do forex day trading, you become an active trader or a day trader. The advent of day trading became even more prominent when electronic trading became more popular. And its popularity increased when traders realized how much profits such a short term strategy can provide. Forex day trading is undeniably risky, but it also promises such bigger benefits that make the risks worth taking. In fact, day trading has often been compared to gambling due to its fast-paced risk and profit exchange.
On the other hand, long term forex trading strategies are usually implemented by traders for weeks and even months. When long term traders buy, they can decide to hold on to their currency for as long as their long term strategy deems necessary. Long term forex trading strategies are less risky as you have time to plan your moves and to let the market move accordingly then to respond to it.
Due to the more stable nature of long term forex trading strategies, adhering to the concepts of long term trading while doing day trading can give you a more balanced playing field as you trade. By combining both strategies, you get the full blast of benefits both forex trading strategies offer.
Forex day trading offers two main benefits: you get immediate results and you can quickly exit when losses come. So if you win, you get the profits fast. But if you lose, you can make a quick exit so you can minimize the damage done. Aside from these, a fast-paced trading market with immediate results can help a trader become more adept in the field and can help improve his skills and efficiency in trading.
Long term forex trading strategies, however, also offers a lot of benefits you can also enjoy, such as a more steady run, reduced impact of fluctuations in currency value, benefits from interest rate differentials or IRD, and the ability to correct minor errors in decision-making. All these can contribute to a more consistent and beneficial trading strategy.