DEFINITION of 'Guerrilla Trading'

A very short-term trading technique that aims to generate small profits while taking on very little risk per trade and repeating this multiple times in a trading session. Guerrilla trades typically have a shorter duration than scalping or day trades and seldom last for more than a few minutes, at the most. Because of its high trading volume and limited return nature, low commissions and tight trading spreads are prerequisites for successful guerrilla trading. As it also demands considerable trading expertise, guerrilla trading is generally not recommended for novice traders.
 

BREAKING DOWN 'Guerrilla Trading'


While guerrilla trading can be applied to any financial market, it is particularly well suited for trading foreign exchange. This is because the major currency pairs typically have very tight trading spreads because of their plentiful liquidity that is virtually available around the clock. Many online forex brokers also offer levels of leverage to traders for trading currencies that are much higher than that available on equities.
 
But these elevated levels of leverage – which may be as much as 50 times the trader’s capital – represent a high-risk, high-reward scenario that can wipe out an inexperienced guerrilla trader in a few trading sessions. The ability to cap the loss on an unprofitable position quickly, before it spirals out of control, is therefore an essential trait for a guerrilla trader. With a profit objective that is limited to 10 to 20 pips per trade, guerrilla traders generally rely on advanced technical analysis systems for trading signals.

Ready to go further in understanding guerrilla trading? Read Introduction To Guerrilla Trading

RELATED TERMS
  1. Guerrilla Marketing

    A marketing tactic in which a company uses surprise and/or unconventional ...
  2. Forex Scalping

    A trading strategy used by forex traders to buy a currency pair ...
  3. Active Trading

    Active trading is the buying and selling of securities with the ...
  4. In And Out

    A trading strategy in which shares of a single security are bought ...
  5. Currency Day Trading System

    A currency day trading system is a set of analyses that a forex ...
  6. Forex Trading Strategy

    A set of analyses that a forex day trader uses to determine whether ...
Related Articles
  1. Trading

    Introduction To Guerrilla Trading

    Guerilla trading can takes a lot of expereince, risk capital and mental fortitude; it is not for the novice investor.
  2. Trading

    Introduction To Guerrilla Trading

    Guerrilla traders aim to make small profits per trade, but also to make so many trades in a session that their gains justify the risks.
  3. Trading

    Is Scalping Or Swing Trading Right For You?

    A look at how scalping strategy is different from a swing trading strategy.
  4. Trading

    Scalping As A Novice Trader

    Scalping, a subset of day trading used by experienced traders, involves quick moves and decision making. We offer the basics for beginner scalpers.
  5. Personal Finance

    A Day in the Life of a Day Trader

    Day trading has many advantages and, while we often hear about these perks, it's important to realize that day trading is hard work.
  6. Trading

    How to Become a Day Trader on the Stock Market

    Want to become a day trader? Here's what to know about the mindset, education, and long hours it takes to make a consistent living trading stocks.
  7. Trading

    How Much Trading Capital Do Forex Traders Need?

    Even a small pip profit can mean substantial percentage returns over time.
  8. Trading

    The 10 Worst Mistakes Beginner Traders Make

    Traders generally buy and sell securities more frequently and hold positions for much shorter periods than investors, which can result in costly mistakes.
  9. Trading

    Top 10 Rules For Successful Trading

    Whether you're a novice or an expert, these 10 rules should be the backbone of your trading career.
RELATED FAQS
  1. Is scalping a viable forex trading strategy?

    Scalping in the forex market involves trading currencies based on a set of real-time analysis. The purpose of scalping is ... Read Answer >>
  2. How do I implement a Forex Signal System into a forex trading strategy?

    Learn how traders use different types of forex signal systems such as trend-based or range-based to create or supplement ... Read Answer >>
  3. How do day traders capture profits from the difference between bid and ask prices?

    Discover how day traders capture profits from the difference between bid and ask spreads. These spreads blow out during volatile ... Read Answer >>
  4. What is the difference between extensive margin and intensive margin in economics?

    Find out why it is important for traders to understand the difference between initial margin requirements and maintenance ... Read Answer >>
  5. How risky are futures?

    Understand how futures contracts are trading and learn what aspect of futures trading poses potentially greater risk than ... Read Answer >>
  6. How is the value of a pip determined?

    Learn how the pip is used in the pricing of a currency pair in forex trading, and see how the foreign exchange market is ... Read Answer >>
Hot Definitions
  1. Pro-Rata

    Used to describe a proportionate allocation. A method of assigning an amount to a fraction, according to its share of the ...
  2. Private Placement

    The sale of securities to a relatively small number of select investors as a way of raising capital.
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. Backward Integration

    A form of vertical integration that involves the purchase of suppliers. Companies will pursue backward integration when it ...
  5. Pari-passu

    A Latin phrase meaning "equal footing" that describes situations where two or more assets, securities, creditors or obligations ...
  6. Interest Rate Swap

    An agreement between two parties (known as counterparties) where one stream of future interest payments is exchanged for ...
Trading Center