Best CFD Trading Styles That Beginners Should Know

The Forex industry is an excellent place to earn profit by buying and selling currency pairs. People may think that it is an easy platform to make money in, but the situation changes when they enter the real market. There are too many challenges that a beginner faces after joining here. Experts always suggest these new people develop a powerful strategy to avoid market failure. But beginners don’t understand what they should do to develop a strategy. Don’t worry because we are going to reveal the best trading styles to overcome the possible troubles and to bypass stressful situations.

Before developing a strategy, every trader in Singapore should focus on his psychology. While building a design, make sure that it fits you. Otherwise, every trade will make your situation more stressful.

Two things to consider before choosing a style

These are two important things that should be considered before selecting a style for dealing.

·         Timeframe

It is essential because it determines the holding duration. After buying a currency pair, a trader needs to retain it for a particular period, and it depends on the timeframe. There are two types of holding periods – the higher timeframe and the lower timeframe. Each of these frames determines the degree or duration. For example, when a trader chooses the lower timeframe, it indicates the holding period may range from a few minutes to hours. Similarly, the higher frame will indicate that the investor has to retain his purchased pair for a particular time ranging from a few days, or weeks, to a few months. Explore educational articles at Saxo and try to reinforce your knowledge on timeframe selection. Never get frustrated at the initial stage since it is very normal at trading.

Since you are a newbie in the CFD industry, we suggest you choose a higher frame because it will give you time to analyze the chart and to generate the right decision. Choosing the lower one can make the situation stressful because, in that case, the newbie needs to make decisions within a few minutes, and a wrong decision can blow the whole deal.

·         Analysis process

There are two kinds of analyses in the Forex industry – Fundamental and Technical. A fundamental analyst deals with the economic indicators and the external factors that control the ups and downs of the currency exchange and stock market. These factors include GDPs, CPI, interest rates, inflation, economic recession, unemployment rate, etc. The analyst establishes an understandable relationship between these factors so that he can predict the imminent market movement or condition.

A technical analyst, on the other hand, utilizes the chart and don’t consider the economic indicators to predict the approaching flow. These people use different indicators and theories like moving average, Bollinger bands, relative strength index, momentum, convergence and divergence, stochastics, etc., to predict the direction. For short-term traders, this analysis can be helpful.

For novices, we suggest they use the fundamental analysis because of the higher timeframe. It will be a wise choice for them because the technical analysis will require advanced knowledge about the indicators.

Trading styles for the beginners

This section is about possible styles. Let’s see the common strategies that the traders follow –

·         Position trade

In this style, the investor needs to choose a higher frame, and the holding duration varies from days to several weeks or months. People use fundamental analysis to predict the imminent direction.

·         Swing trade

In this type of trading, the trader needs to wait for a swing to take place, and it is also considered a long-term strategy. The holding period varies from a few days to a few weeks. Traders use both fundamental and technical indicators to execute their deals.

·         Day trading

This is a short-term style, and the duration ranges between a few minutes to hours. The investors utilize technical analysis to predict the approaching flow of the price’s value.

Every beginner should start their career in Forex industry as a position trader because it is less risky for them.

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