Scalping

Scalping is the most short-term form of trading. Scalp traders only hold positions
open for seconds or minutes at most. These short-lived trades target small intraday
price movements. The purpose is to make lots of quick trades with smaller profit
gains, but let profits accumulate throughout the day due to the sheer number of
trades being executed in each trading session.

This style of trading requires tight spreads and liquid markets. As a result,
scalpers tend to trade major currency pairs only (due to liquidity and high trading
volume), such as EURUSD, GBPUSD, and USDJPY.

They also tend to trade only the busiest times of the trading day, during the
overlap of trading sessions when there is more trading volume, and often
volatility. Scalpers look for the tightest spreads possible, simply because they
enter the market so frequently, so paying a wider spread will eat into potential
profits.

The fast-paced trading environment of trying to scalp a few pips as many times as
possible throughout the trading day can be stressful for many traders and is hugely
time-consuming, given the fact you will need to focus on charts for several hours
at a time. As scalping can be intense, scalpers tend to trade one or two pairs.

Day trading
For those that are not comfortable with the intensity of scalp trading, but still
don't wish to hold positions overnight, day trading may suit.

Day traders enter and exit their positions on the same day (unlike swing and
position traders), removing the risk of any large overnight moves. At the end of
the day, they close their position with either a profit or a loss. Trades are
usually held for a period of minutes or hours, and as a result, require sufficient
time to analyse the markets and frequently monitor positions throughout the day.
Just like scalp traders, day traders rely on frequent small gains to build profits.

Day traders pay particularly close attention to fundamental and technical analysis,
using technical indicators such as MACD (Moving Average Convergence Divergence),
the Relative Strength Index and the Stochastic Oscillator, to help identify trends
and market conditions.

Swing trading
Unlike day traders who hold positions for less than one day, swing traders
typically hold positions for several days, although sometimes as long as a few
weeks. Because positions are held over a period of time, to capture short-term
market moves, traders do not need to sit constantly monitoring the charts and their
trades throughout the day.

This makes it a popular trading style for those who have other commitments (such as
a full-time job) and would like to trade in their leisure time. However, it is
still necessary to dedicate a few hours a day to analyse the markets.

Swing traders (as well as some day traders) tend to use trading strategies such as
trend trading, counter-trend trading, momentum and breakout trading.

Position trading
Position traders are focused on long-term price movement, looking for maximum
potential profits to be gained from major shifts in prices. As a result, trades
generally span over a period of weeks, months or even years. Position traders tend
to use weekly and monthly price charts to analyse and evaluate the markets, using a
combination of technical indicators and fundamental analysis to identify potential
entry and exit levels.
As position traders are not concerned with minor price fluctuations or pullbacks,
their positions do not need to be monitored the same way as other trading
strategies, instead occasionally monitoring to keep an eye on the major trend.