Money.nikaniku.com – 4 Types of Trading Style. Everyone has their own uniqueness, starting from their personality, talents and preferences. The same thing happens in trading, whether stocks, forex, gold, indices or others. Each person’s trading approach can be different from one another. Some trade more aggressively, others prefer casual trading. Every trader is unique, so it’s best to have their own trading style. What exactly is a trading style? What are the trading styles?
What is a Trading Style?
Trading style or trading style is the approach that a person takes to trade, for example fast or relaxed. Trading style is primarily concerned with how long a trader is in the market when a trade is made. For example a few minutes, a few hours, a few days, or a few months.
What is the Difference Between Trading Style and Trading Strategy?
Trading styles are often mixed up with trading strategies. Though the two are different. Trading style is related to how long a trade is made, while trading strategy is more about how to enter and exit the market. In martial arts, trading styles are like boxing, kung fu, judo, karate, and so on. While the trading strategy, attack and dodge techniques respectively.
What is the Importance of Choosing a Trading Style?
Trading style is important to determine from the start, because from there we will be able to make trades that maximize our strengths and minimize our own shortcomings. A person’s suitability for a particular trading style will usually affect subsequent trading performance.
What are the Types of Trading Styles?
In general, there are 4 types of trading styles, namely:
1. Scalping
Scalping is a style of trading that is carried out over a very short period of time, usually seconds or minutes. This trading style is very active, but only tries to make small profits. This trading style is usually carried out in high frequency (large number of transactions). Usually this trading style targets a market that is liquid and tends to be less volatile.
2. Day Trading
Day trading is a style of trading that takes advantage of daily price fluctuations. Here traders buy and sell in the same day. No trade positions are held until the next day. The time range is from a few minutes to several hours per trade.
3. Swing Trading
Swing trading is a style of trading that seeks to take advantage of price fluctuations over a longer period of time. The time horizon is in days to several weeks.
4. Trading Positions
Position trading is a trading style that uses an even longer time horizon, ranging from weeks to months. Traders who hold trading positions for up to one or two years can still be referred to as position traders.
What are the factors that influence the choice of trading style?
There are several factors that can influence the selection of a suitable trading style, namely:
- Trading objectives. For short or long term goals.
- Personality. Are you one of those people who like things fast or casual.
- risk profile. Are you among those who dare to take risks or not.
- Availability of time. How much time can be devoted to trading and monitoring the market.
- Trading skills. How many trading skills have been mastered.
Tips for Choosing a Trading Style:
Here are some guidelines for those who want to choose the right trading style:
- If you want to get regular income, it is probably more suitable for scalping or day trading
- If you have a relaxed personality, it may be more suitable for swing trading or position trading
- If you don’t want to take more risks, it’s recommended to try swing trading or position trading
- If you don’t have much time, it is recommended to try swing trading or position trading
- If you don’t have a lot of trading skills, it’s recommended to try swing trading or position trading
Which is the Best Trading Style?
If you ask me which trading style is the best, the answer is no. Each trading style has its own advantages and disadvantages. It is not the best trading style to look for, but the one that best suits our personality. If you are not comfortable with an aggressive style of day trading, why push yourself. Not everyone can stand heart sports
in front of a glaring monitor watching price fluctuations. Not everyone can afford to buy shares and then keep them for a year or two and then sell them. The principle is not to push yourself. If you force yourself to a style that is not appropriate, the results will not be optimal in the end.
What Are the Consequences of Choosing a Trading Style?
There are direct consequences for the choice of trading style, namely on the selected time frame. You have to determine the time frame that suits your trading style.
