Political factors such as elections , wars, and other international events , may also give rise to sharp and extended price movements. And these are often assisted by aggressive central bank interventions such as those seen during the financial crisis and COVID pandemic.

Moves driven by forces of this enormous power frequently persist for days, weeks, or even months. The only note of caution is that the responsiveness of these pairs to fundamental factors makes it essential for traders to keep a close eye on the news from around the world while their trades are open.

That said, the big four currency pairs can be traded in the same way as any other pair or financial instruments such as stocks or commodities. So traders who prefer to trade with the trend can look to use swing trading strategies such as bullish or bearish flags, pennants, triangles, or perhaps the cup and handle. Those who like to trade trend reversals, or to catch changes of direction within a range, can look for head and shoulders patterns, double tops, and bottoms. Whatever strategy is used, indicators such as Exponential Moving Averages EMAs , Moving Average Convergence Divergence MACD , Volume, and Relative Strength Index RSI can also be useful tools.

Trading between 1 PM and 4 PM GMT 8 AM and 11 AM US Eastern , when both European and US markets are open, is usually optimal in terms of volume and spreads.

This is when the big moves are likely to begin. But swing traders using a daily or 4 hour chart can be active outside these hours with some success. This volatility can be tricky for day traders. That said, tight risk management is essential when trading this pair, and traders often find that its price moves more in line with technical indicators than is the case with the other majors.

This means that the yen will be subject to huge bullish pressure in times of economic instability and falling stock markets. Constant monitoring of the economic and financial news out of Japan is therefore essential for those who want to trade this pair.

Savvy private investors have always loved the Swiss Franc CHF as a hedge against inflation. And although the Swiss economy is in no way comparable with the Japanese, there are considerable similarities in their currencies. Like the yen, the Swiss Franc is regarded as a safe haven, and it will tend to increase in value against the dollar and the other majors in times of economic turmoil.

But like the Bank of Japan, the Swiss National Bank is extremely wary of letting the Franc rise too high, especially against the Euro, and it never hesitates to sell huge sums to keep exchange rates in its preferred range. Identifying and riding on trends early is the central objective of this trading style , and the profit objective tends to be set higher than that of day trading since the swing trader is expecting that by holding out for a few days, there is a better chance of capturing a larger price move.

Unlike the day trader, the swing trader has to endure overnight risk. As swing trading requires much less minute-to-minute monitoring of the market, this type of trading is generally preferred by people who hold day jobs. My opinion is that swing traders must still keep up-to-date with the latest fundamental and technical changes in the market, even when they are not monitoring the market all the time. Position trading spans the longest period of time, and refers to traders holding their position for weeks or even months.

Position traders seek to identify and trade currency pairs that signal that a medium to long term trend is playing out — but will take more than a few days to play out. Their positions are usually closed before the trend runs out of power. This trading time frame is the least time-consuming one among all the different ones, as there is not much need for intensive monitoring. Many position traders place a trailing stop which automatically closes their position if the price retraces past a particular point.

As a general rule of thumb : the smaller the time frame you trade then the more time is needed to be devoted to monitoring the markets. Someone who day trades tends to be more in touch with the price swings and goings-on of the market as positions are opened and closed during the same day. Whereas at the end of the spectrum, a position trader does not have to monitor the market so intensively.

Risk-wise , I would say that the longer the time frame used in trading, the more risk has to be assumed by the trader. This is simply because the market has more time to move against them, and can move much further against them than it can in a smaller time frame.

Many of the strategies mentioned in this book are meant for short-term trading. However, you may decide on the length of your holding period to suit your personal preference by adjusting the profit target and stop-loss accordingly. Of course, the size of profit objective and stop-loss will be proportional to the length of your holding period — the shorter your time frame, the smaller your profit target and stop-loss should be; the longer the trading time frame, the wider your profit target and stop-loss can be.

Your email address will not be published. Day trading. Swing trading. Position trading. Choosing a time-frame. Recommended Article: Can I Make a Living Trading Forex. Leave a Reply Cancel reply Your email address will not be published.

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There are dozens of currency pairs available to trade every day; and countless possible combinations of profitable trading styles, strategies , and indicators. The principal advantage of the majors is the high volume and liquidity they offer. This makes it easy to open and close huge positions with usually little or no slippage from target prices. High trading volumes also lead to tight spreads between bid and ask prices, with consequently increased profitability.

Finally, the volume and liquidity offered by the majors make them generally less volatile and easier to trade than the more exotic pairs — particularly for inexperienced traders. The majors are the currencies of the largest economies in the world, traded in huge volumes by global financial institutions every day.

So they often move sharply in response to fundamental economic factors such as changes in interest rates, trade balances, GDP, employment, and inflation.

Political factors such as elections , wars, and other international events , may also give rise to sharp and extended price movements. And these are often assisted by aggressive central bank interventions such as those seen during the financial crisis and COVID pandemic.

Moves driven by forces of this enormous power frequently persist for days, weeks, or even months. The only note of caution is that the responsiveness of these pairs to fundamental factors makes it essential for traders to keep a close eye on the news from around the world while their trades are open.

That said, the big four currency pairs can be traded in the same way as any other pair or financial instruments such as stocks or commodities. So traders who prefer to trade with the trend can look to use swing trading strategies such as bullish or bearish flags, pennants, triangles, or perhaps the cup and handle. Those who like to trade trend reversals, or to catch changes of direction within a range, can look for head and shoulders patterns, double tops, and bottoms.

Whatever strategy is used, indicators such as Exponential Moving Averages EMAs , Moving Average Convergence Divergence MACD , Volume, and Relative Strength Index RSI can also be useful tools.

Trading between 1 PM and 4 PM GMT 8 AM and 11 AM US Eastern , when both European and US markets are open, is usually optimal in terms of volume and spreads. This is when the big moves are likely to begin. But swing traders using a daily or 4 hour chart can be active outside these hours with some success. This volatility can be tricky for day traders.

That said, tight risk management is essential when trading this pair, and traders often find that its price moves more in line with technical indicators than is the case with the other majors. This means that the yen will be subject to huge bullish pressure in times of economic instability and falling stock markets. Constant monitoring of the economic and financial news out of Japan is therefore essential for those who want to trade this pair. Savvy private investors have always loved the Swiss Franc CHF as a hedge against inflation.

And although the Swiss economy is in no way comparable with the Japanese, there are considerable similarities in their currencies. Like the yen, the Swiss Franc is regarded as a safe haven, and it will tend to increase in value against the dollar and the other majors in times of economic turmoil. But like the Bank of Japan, the Swiss National Bank is extremely wary of letting the Franc rise too high, especially against the Euro, and it never hesitates to sell huge sums to keep exchange rates in its preferred range.

But it does mean that we have to pay constant attention to the fundamentals affecting each of these huge economies, and are ready to respond and adapt accordingly. Combine this attitude with correct risk management , and the majors will offer us great profit opportunities every day.

Get a free trial and access their charting platform with market-leading features. Menu Swing Trading Investing Real Estate Housing Market Housing Market Crash. There are so many choices that even experienced traders can sometimes feel overwhelmed. What are the Forex Majors? But there are good reasons for traders, particularly new ones, to focus on just a few pairs.

Why Focus on the Major Currency Pairs? Why Swing Trade When Forex Trading? General Strategies for Swing Trading the Majors That said, the big four currency pairs can be traded in the same way as any other pair or financial instruments such as stocks or commodities. But there are some characteristics of each pair that traders need to be aware of. Tim Thomas has no positions in the stocks, ETFs or commodities mentioned. Featured image credit: Unsplash.

Position trading. Why Focus on the Major Currency Pairs? And these are often assisted by aggressive central bank interventions such as those seen during the financial crisis and COVID pandemic. So traders who prefer to trade with the trend can look to use swing trading strategies such as bullish or bearish flags, pennants, and triangles, or perhaps the cup and handle. Those who like to trade trend reversals, or to catch changes of direction within a range, can look for head and shoulders patterns, double tops, and bottoms. But it does mean that we have to pay constant attention to the fundamentals affecting each of these huge economies, and are ready to respond and adapt accordingly. They thus tend to have smaller spreads than exotic pairs and attract the most traders to them, which keeps the volume high.

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