When a new trader enters the forex market, they can easily get confused with the variety of forex trading strategies on offer. Some of these strategies are a lot more popular than others but at the end of the day, how does a new forex trader know which one is best suited for them.
A team at TopTradingPlatforms commissioned a study of Forex traders in the UK and their most used strategies. Around 1,747 Britons that were actively trading in forex were asked about the top strategies that they used on the market and there answers were rating interesting. New traders can take learn from these findings and narrow down what strategy they would like to work with initially.
The most popular strategy right now is day trading. Around 40% of the respondents said that they ended trading before the end of the day. The main idea behind this strategy is to completely exit the market so that they will not be affected by any large forex moves during the night – as they have no control during this period of time. Most deals in day trading last a few hours, though minute deals are also seen.
The survey showed that 35% of the respondents said that they preferred using scalping. This is the use of short-lived trades. With fluctuations in the forex market, some currencies only gain a few cents at times. This is ideal for scalpers who just want a few points of profit before closing the deal.
Swing trading was the third-most popular strategy, with 18% of the respondents making the choice. This strategy is a multi-day strategy with the trader holding on to a currency hoping to profit from observing price patterns. Assessments are made every hour to sell.
Positional trading was chosen by 7% of the respondents. This is the strategy chosen for long-term gains. The main focus is to gain money from major shifts in forex price instead of small shifts. These traders only check prices at the end of the day.
UK Traders Not Very Savvy With Forex Trading
The survey shows that UK forex traders are more focused on short-term gains. One reason for this could be because of a lack of proper forex education and confidence in trading skills.
In a statement, Ethan Rowe, editor-in- Chief of TopTradingPlatforms.co.uk, said
This trend is quite surprising as it clearly shows that most forex traders in the UK have very little knowledge of financial assets and they might be using online trading as a different form and maybe a more ‘politically correct’ way of gambling their money away.
Rowe emphasized that this meant that online forex brokers should focus on providing better education to traders. This would be useful to them as it would help them retain their customers long term and help them protect their capital from being burned up too quickly.