Trading via fully automated computer programs — rules executed by code, no human discretion per trade.
Algorithmic ('algo') trading covers everything from simple MetaTrader EAs to multi-million-dollar institutional systems. The label says nothing about the strategy itself — it's about the execution method.
Also called: algo trading, systematic trading
Open full pageIncreasing size after wins and decreasing after losses — the opposite of martingale, mathematically sound.
Anti-martingale aligns with positive expectancy: press your edge when winning, protect capital when losing. Position sizing rules like fixed-fractional and Kelly are forms of anti-martingale.
Also called: reverse martingale, pyramiding
Open full pageSimultaneously buying and selling related instruments to profit from price discrepancies — theoretically risk-free.
True arbitrage is largely extinct in retail FX — institutional players close gaps in microseconds. What retail calls 'arbitrage' (latency arb, broker arb) usually relies on broker pricing errors and is heavily restricted by terms of service.
Open full pageBorrowing in a low-yield currency and investing in a high-yield currency to capture the interest rate differential.
The classic carry trade: long AUD/JPY when AUD rates are above JPY rates — collect swap nightly, gamble on no major risk-off event. Historically profitable in calm markets, devastating during shocks (2008, 2015 CHF crash, etc.).
Also called: carry
Long AUD/JPY with positive swap of $13/day per lot, hold for 30 days = $390 in carry, before P&L on the pair itself.
Automatically replicating another trader's positions in your own account — modern incarnation of mirror trading.
Copy trading platforms (eToro, ZuluTrade, broker-native systems) let users follow specific traders. Returns depend entirely on the chosen leader; survivor-ship bias in 'top trader' lists is severe.
Also called: mirror trading, auto-follow
Open full pageOpening and closing all positions within the same trading day — no overnight exposure.
Day traders typically hold positions minutes to hours and exit before session close to avoid overnight risk (gaps, swap, weekend exposure). Style sits between scalping (seconds) and swing trading (days).
Also called: intraday trading
Open full pageTrading based on human judgment of each setup, rather than fully mechanical rules.
Discretionary trading lets you adapt to context that's hard to encode (geopolitical risk, exhausted-looking moves, unusual price action). Downside: results are very hard to backtest and even harder to debug — was the loss bad analysis or bad execution?
Also called: judgment-based trading
Open full pagePlacing buy/sell orders at fixed price intervals — profits from price oscillation but accumulates large positions in trending markets.
Grid systems work great in ranges and catastrophically in trends. The classic failure mode: deep, expanding grid that gets margin-called when price walks one direction without retracement.
Also called: grid
Open full pageAlgorithmic trading at extreme speed and frequency — microsecond hold times, thousands of trades per day.
HFT is the domain of institutional players with co-located servers, FIX-API access, and infrastructure budgets in the millions. Retail 'HFT' is mostly a marketing label — true HFT requires latency advantages retail simply can't access.
Also called: HFT
Open full pageExploiting price lag between a fast price source and a slower broker feed — usually banned in broker T&Cs.
Latency arb is profitable in theory but extremely hard in practice: brokers monitor for it, void trades, close accounts. Many retail 'latency arb' EAs are scams or work only briefly before being detected.
Also called: latency arb
Open full pageDoubling position size after every loss — recovers all prior losses with one win, but blows up on long losing streaks.
Mathematically guaranteed to break any finite account given a long enough losing streak. Martingale-based EAs can show smooth profits for months, then wipe out an account in a single bad week.
Lose 1 lot, double to 2. Lose, double to 4. Lose, double to 8. Lose, double to 16. After 6 losses you'd need 64 lots to recover — most retail accounts are gone before that point.
No risk management can save a true martingale strategy. The system's exposure scales exponentially, so a single extended bad run zeroes the account.
Trading on the assumption that price will return to its average — buying overshoots, selling overshoots in the other direction.
Mean reversion is the philosophical opposite of trend following. Often high win rate (60–80%), modest R:R, vulnerable to fat-tail events when 'reversion' becomes a trend. Bollinger Band fades and RSI extreme reversals are classic mean-reversion plays.
Also called: counter-trend trading, fade
Open full pageStrategies built around scheduled economic releases — NFP, CPI, FOMC, central bank decisions.
News trading splits into two camps: predicting the release (very hard) and reacting to it (also hard, due to slippage and spread widening). Many brokers restrict EA activity around major news.
Open full pageHolding trades for weeks to months — focused on long-term trends and macro themes.
Position traders trade weekly and monthly charts, often holding through significant drawdowns to capture multi-thousand-pip macro moves. Macro fundamentals dominate the decision process.
Also called: macro trading
Open full pageBuying near support and selling near resistance when price is consolidating without trend — opposite of breakout trading.
Range trading is profitable when most others are losing on breakouts. The challenge: knowing when the range is about to end. Combine with ADX (low = range bias) and volume to filter out emerging trends.
Also called: mean reversion intraday
Open full pageA trading style aimed at small profits (1–10 pips) per trade, held seconds to minutes, with high trade frequency.
Scalping demands tight spreads, low commission, fast execution, and a strong stomach. Edge usually comes from execution quality (slippage, latency) and a very high win rate at low R:R.
Also called: scalp, scalper
Open full pageTrading platforms with social features — follow, discuss, copy other traders. Broader concept than copy trading.
Social trading platforms blend community features (comments, leaderboards, trade signals) with execution. eToro popularised the model; many brokers now offer their own versions.
Open full pageTrading the temporary divergence between historically correlated instruments — expecting reversion to the mean.
Stat arb (or 'pairs trading') in FX: long EUR/USD short GBP/USD when their correlation spikes outside the historical range. Requires careful correlation analysis and position sizing for the spread, not the legs.
Also called: stat arb, pairs trading
Open full pageHolding positions for several days to a few weeks, capturing the 'swings' between higher-timeframe highs and lows.
Swing trading is the natural style for traders with day jobs — analysis happens on daily or 4H charts, trades are placed and managed in minutes per day. Targets are typically multi-day moves of 100–500+ pips.
Also called: swing
Open full pageBuying strength and selling weakness — staying in trades for as long as the trend persists.
Trend following is one of the oldest and most studied edges in markets. Low win rates (often 30–40%) with very high R:R (3:1, 5:1, even 10:1 on monster trades). Requires huge patience and willingness to sit through drawdowns.
Also called: trend trading, momentum trading
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