In this article we look at different trading styles and then move on to discuss how to use mt4, including how to add indicators, customise metatrader 4 charts and much more.
The four main trading styles are scalping, day trading, swing trading and position trading. What separates the different trading styles is the frequency of the trades, how long you are going to trade and the timing of your entry.
| TRADING STYLE | TIMEFRAME | TIME PERIOD OF TRADE |
| Scalping | Short-term | Seconds or minutes |
| Day trading | Short-term | 1 day max – do not hold positions overnight |
| Swing trading | Short/medium-term | Several days, sometimes weeks |
| Position trading | Long-term | Weeks, months, years |
Below we look at some of the most popular trading strategies.
Trend following or trend trading
Trend following is a trading strategy which tries to take advantage of market moves after they happen. So, trend traders simply follow the trend instead of trying to speculate or forecast price levels. These traders anticipate that the trend will persist for a long time, but if the trend changes, they exit and wait until the trend establishes itself in the opposite direction.
Contrarian trading
In contrarian trading, traders explore market opportunities that go against market sentiment. So, they will buy when the market is selling off and they will sell when everyone’s buying. Warren Buffet is the most famous contrarian investor. The idea of contrarian trading or investing is that the contrarian trader will enter when others feel negative about the market. For the contrarian, this means that the value of the stock, for example, is below its real value, so s/he enters to buy it cheaply. While it can be rewarding, contrarian trading is a risky trading strategy that tends to take a long time to pay off.
Value Investing
Like contrarian investing, value trading or investing looks for undervalued assets based on the current market mood. So, a value investor will go for stocks whose share price is lower than the actual value of the company. Value investors believe that stock price movements in the short term don’t reflect a company’s long-term fundamentals and that the market tends to overreact to news.
News trading
News trading strategy aims to capitalise on market movements triggered by financial news and economic data. News trading may provide plenty of trading opportunities, but it is not without risk. By following and reading the news and checking an economic calendar daily, you will be able to make better-informed decisions, but you can never be sure how markets will react 100%.
Momentum trading
Momentum trading is a strategy that seeks to take advantage of existing trends. Momentum traders tend to buy or sell when an asset is clearly moving in one direction and exit when this movement is reversed.
Options trading
An option is an agreement in which the buyer has the right to buy (a call) or sell (a put) the underlying asset at a specific price on or before a specific date. Options are derivatives and they derive their value from the underlying asset. There are many options trading strategies such as covered call, married put, bull call spread, bear put spread and many more.
Position trading
Position trading involves holding a position for a long period of time, from weeks to even months. A trader would hold a position for a prolonged period and ignore short-term movements. In this case, traders seek to take advantage of price changes driven by underlying fundamental factors that influence the asset’s value.
Mean reversion trading
Mean reversion trading takes advantage of sharp and big changes in the price of a particular asset, knowing that the price will always return to its original state. This type of trading is based on the idea that a level that deviates from its long-term norm will always revert to its understood average state.
How do you use Metatrader 4 according to your trading style?
Depending on which style you prefer, you can tailor the MT4 trading platform to suit your specific needs. MT4 add-ons allow you to customise the MT4 platform to better suit your trading style. By combining MT4 indicators and add-ons you can implement the best strategy for you. You can download and install whichever Metatrader 4 indicators and add-ons you wish to enhance your trading experience and gain more insights.
Metatrader 4 add-ons and indicators
Selecting the right MT4 indicator depends on your trading strategy. If you are a day trader, you may choose a different series of indicators than another trader who has a different trading style. Whatever your trading style and strategy, you can customise MT4 and install an indicator that works well with your strategy.
If you are a trend-following trader you can use moving averages to discover in which direction the trend is going, while you can combine it with the RSI indicator and price channels to determine if the price is oversold or overbought. A different type of trader that capitalises on price movements in range-bound markets or “choppy markets” might use the RSI indicator and horizontal support and resistance levels.
Regardless of your preferred trading style, the MetaTrader 4 platform offers thousands of indicators that you can use, some of them for free, others you can buy and install. If you are a developer, you can create a custom indicator for yourself.
Metatrader 4 add-ons
MT4 add-ons are additional software programs that can be installed on the MT4 platform. They can be purchased by independent firms. For example, you can install an Economic calendar, a Position size calculator, a trading terminal, a sentiment trader, an alarm manager and many more. The sentiment trader can analyse market sentiment or view a chart with historic prices and sentiment. The correlation trader looks at the correlations between 2 different markets.
Ultimately, there are many add-ons out there that you can select to assist you in your trading style. If you want to focus on market analysis there are add-ons to help you do this faster and easier, or add-ons to help you scan and identify chart patterns with ease. You can discover whether a trend is entering a reversal or identify the trend of the securities you are trading.
Take your time and do your own research as some of these may be quite expensive. The possibilities are limitless, and you can customise and personalise your trading platform according to your needs. The sky is the limit, and with so many choices out there, you can improve your chances of achieving success.
Disclaimer:
This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked, in this communication.
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