A Look At Short Time Frame Forex Trading System
A look at guerilla trading and scalping – two of the shortest time frame Forex trading system.
When we begin trading Forex, we are often confused by the different Forex trading system available out there. The trading system is a trading plan, utilizing different aspects of research and different resources and guidelines to work towards a profitable trade outcome on a consistent basis.
This article will look at elements of two of the shortest Forex trade system in terms of the duration of trades, guerilla trading, and scalping.
A Look at the Guerilla Forex Trading System
Guerilla trading involves the shortest duration trades available on the Forex market. Traders tend to be in and out within a minute or two and looking to accrue around 10 to 20 pips per trade. Guerilla traders will use high leverage in order to maximize gains from their investment capital pot. They will often use around 5 or 10 pips below the trend as their stop loss point. This kind of trading involves sticking rigidly to the strategy. One drop of 50 or 100 pips where stop losses are not implemented can mean it takes a day or more to catch up with the losses.
Like with any strategy, money management is the key. It’s important to only risk a small percentage of one’s financial account in any trades and this becomes even more crucial with this type of high-risk investment. Of course, guerilla traders will need a lot of volatility in the market and will have to follow the trend in order to make success. They will actively avoid situations where there is lack of predictability and will aim for market conditions where they can be confident that they can pick up the majority of their trades and get out quickly.
This kind of trading is normally reserved to the most experienced traders and is based primarily on technical analysis where trader assesses the trend over a minute or 5 minutes and jumps in to get a quick profit.
The Scalping Forex Trading Systems
Scalping is similar to guerilla trading, except that traders tend to be looking to gain 20 to 50 pips and to stay in the trade a little longer. Again, they will be trading the trend rather than primarily looking for reversals and swings. They will be making multiple trades a day just like the guerilla trader.
A scalper may make between 30 and 50 trades a day, attempting to make very small profits along the way. They will often use leverage but perhaps not as much as the guerilla trader.
Again, the important part of scalping is setting your stop loss limits. They can be a little less conservative than with the guerilla trader, but should ensure that profits are not eked away by having trades fall down into the negative.
Choosing a Broker for Short Time Frame Trades
Forex trading systems that involve getting in and getting out fast require a certain type of broker. To start, the trading platform should allow scalping and guerilla trading, as many do not. In addition, there should be margins or spreads that are small enough to enable profits to be made over short time frames. Some of the broking platforms have spreads that make it extremely difficult to do anything other than longer trading. One good platform that enables short term trading is called “Oanda”.
This platform is simple to sign up with. You register, provide your authentication and ID, and then you can begin on a demo or real money to practice your scalping and guerilla trading.