Scalping vs day trading: Pros and cons -
Now that you begin your journey to learn Forex, it will be bad to miss an explanation about scalping and day trading. If you have read about various trading style before, you must have ever heard about the three styles of trading including scalping, swing trading and day trading. When you start trading in foreign exchange, knowing which trading style suits you is important.
A Brief about Scalping
Let’s begin from scalping. This trading strategy is where traders or also called scalpers intend to earn profits from comparatively little price changes. Scalpers frequently open and then close bigger amounts of trade setups in 24-hour trading season with a target to catch many small wins. Moreover, scalpers tend to go into and go out the market in a short timeframe too.
• The Pros and Cons of Scalping
So, what is the benefit of using this trading style? The primary benefit of scalping is the capacity to achieve profits from just a small price change within the express timeframe possible that is habitually strengthened by a bigger size of position. This style is recognized for its quick execution. In such extreme instance, traders can open and the close a trade within several seconds.
Considering how fast this strategy is in nature, as a scalper, you have to be accurate with your execution and timing. If you are wondering how a trader can do a trade this fast, there are some tips to follow. First, you should decide to trade on lower timeframes like one to five minute charts. Then, don’t forget to benefit indicators to approach the market.
A Brief about Day Trading
A lot of traders believe that scalping and day trading are similar. Even though both of them work within 24-hour trading session only, there are actually some essential differences which we have to emphasize. Day traders enter and exit a trade with considerably less setups in contrast to scalpers. Day traders sometimes do it a day, and frequently not over a duo per trading session.
• The Pros and Cons of Day Trading
Different to scalper, day trader will concentrate on the best trading chances on that day and then hold on for awhile until they can achieve bigger profit target. Thus, a day trader typically holds their trade for a few hours, but never more than a full 24-hour session. What makes this style is beneficial is because it can assist traders to manage their trades efficiently.
In addition, day trading can also keep time trace in effective manner. On the other hand, day traders are recognized for blending different analysis styles into their trading plan. They most of the time mix indicators like price action, RSI and MACD. Furthermore, they typically use candlestick patterns in order to determine trends. Occasionally, they also add patterns such as wave and chart pattern.
Comparing Scalping vs Day Trading
Now that you have known the main concept of scalping and day trading, you must like to know which trading style is better. The answer can be as simple as: it depends. Well, the best style for every trader can be different from one to another since it is dependent on various factors such as comfort level, available time to trade and trading goals.
Depending on your preference for each factor above, you must have known which trading strategy is better for you. What you need to bear in mind is that there is no correct or incorrect trading style. This is because everything depends on your situation. So, you can think of learn
Forex trading styles for more and find out which one suit you best.