⚙️ Trading Strategies
Strategy choice depends on your profile, available time, capital size, and risk tolerance. There is no single best strategy — only strategies that fit the trader.
Strategies by time horizon
Scalping
| Property | Detail |
|---|---|
| Horizon | Seconds to minutes |
| Goal | Capture 1–5 pip movements, many times per session |
| Requirements | Ultra-low latency execution, very tight spreads, full-time focus |
| Typical profile | Professional traders, HFT algorithms, a small number of very experienced retail traders |
| Risk | Spread cost is the primary drag — must be minimized |
Day Trading
| Property | Detail |
|---|---|
| Horizon | Minutes to hours — all positions closed by end of day |
| Goal | Capture intraday directional moves |
| Requirements | Full-time availability during the session, strong intraday reading |
| Typical profile | Full-time professional or dedicated retail traders |
| Risk | No overnight risk; susceptible to news spikes within the session |
Swing Trading
| Property | Detail |
|---|---|
| Horizon | Days to a few weeks |
| Goal | Capture intermediate moves within trends |
| Requirements | Good technical + macro reading; compatible with a parallel job |
| Typical profile | Most consistently profitable retail traders |
| Risk | Overnight and weekend gap risk; requires wider stops |
Position Trading
| Property | Detail |
|---|---|
| Horizon | Weeks to months, sometimes years |
| Goal | Capture large macroeconomic cycles |
| Requirements | Strong fundamental analysis, patience, sufficient capital for large drawdowns |
| Typical profile | Macro hedge funds, institutional investors |
| Risk | Long drawdown periods; requires high psychological resilience |
Strategies by execution style
Trend Following
Identifies trends in formation and trades with them until reversal signals appear. Historically the most robustly profitable systematic approach across long periods. Common characteristics:
- Win rate often 35–45% — but average winner is significantly larger than average loser
- Long periods of small losses followed by large winning trades
- Works best in trending, volatile markets; suffers in sideways ranges
Mean Reversion
Bets that price extremes tend to revert to the mean. Works well in ranging markets; suffers in strong trends.
- Higher win rate (60–70%+) but smaller average winners
- Requires tight risk management — a single trending move against the position can wipe multiple wins
Breakout
Trades the moment price breaks through a significant support/resistance level or consolidation zone. Captures explosive moves but suffers from false breakouts.
- Entry on confirmed close above/below the level
- Stop placed back inside the broken zone
- Filters (volume, daily ATR, time of day) reduce false signals
News Trading
Trades the immediate price impact of high-impact data releases (NFP, CPI, central bank decisions). Very high risk:
- Spreads can widen 5–10× during the seconds around a release
- Slippage can be severe
- Professional news traders use co-located servers to beat the spike — not practical for most retail traders
Carry Trade
Buys high-interest-rate currencies funded by low-interest-rate currencies. Earns the interest differential (swap/rollover) daily.
- Classic pairs: AUD/JPY, NZD/JPY, EUR/AUD
- Long-term strategy, highly sensitive to global risk appetite
- Unwinding of large carry trades can cause sharp, rapid reversals
Algorithmic / Systematic Trading
Strategies fully or partially automated, based on mathematical and statistical models. The approach used by HyperFX's own operation — covered in full in Algorithmic Trading →.
Strategy comparison table
| Strategy | Avg. hold | Trades/day | Win rate | R:R ratio | Spread impact | Difficulty |
|---|---|---|---|---|---|---|
| Scalping | <5 min | 20–100 | 55–70% | 1:1 – 1:1.5 | Very high | Very high |
| Day trading | 30 min–4h | 2–10 | 45–60% | 1:1.5 – 1:2 | Medium | High |
| Swing trading | 2–7 days | 0.5–3 | 40–55% | 1:2 – 1:3 | Low | Medium |
| Position trading | Weeks–months | <0.5 | 35–50% | 1:3 – 1:5 | Very low | Medium (patience) |
| Trend following (algo) | Variable | 1–5 | 35–45% | 1:3 – 1:5 | Low | High (build+validate) |
| Mean reversion (algo) | Hours–days | 2–8 | 60–70% | 1:1 – 1:1.5 | Medium | High (build+validate) |
How to choose a strategy
:::tip Key factors
- Time available — Scalping requires your full attention. Swing trading works alongside a job.
- Capital size — Smaller accounts benefit from micro lots and swing strategies. Larger accounts support position sizing for longer-term strategies.
- Personality — Are you patient or impatient? Can you hold a position for days while it moves against you before turning?
- Validation first — Never trade a strategy live before it has been backtested and forward-tested. See Strategy Validation →. :::
Study resources
| Resource | Description |
|---|---|
| Investopedia — Trading Strategies | Overview of major trading approaches |
| Trading Systems and Methods — Perry Kaufman | Comprehensive reference on systematic strategy design |
| Way of the Turtle — Curtis Faith | First-hand account of one of the most successful systematic trend-following programs in history |
The Trading Channel — 'Complete Forex Trading Course' — covers strategy development from technical setup to execution rules, with real chart examples.
➡️ Next
- Risk Management → — Position sizing, leverage, and protecting capital.