There are different Trading styles followed by traders which are customized for their needs. Here in this article, tradingcritique.com explains to you about the major Trading styles that are classified based on how much time you can spend for trading. If you want to know about all the basic information on trading, Trading Critique recommends you to read the article on Trading: All you need to know about.
What is Trading style?
The Trading Style refers to the style or process which a trader follows to execute the trade. It is mostly classified on how much time a trader prefers to hold the investments in the financial assets. Some traders follow one type of trading style, others may follow a combination of trading styles. The selection of the trading style depends on the trader and the investments.
Selecting your Trading Style is an important aspect in Trading as it determines the various other processes and techniques you should follow in your trade. The Trading Style you select determines your Trading plan and your Trading strategy. There are four major Trading styles, which are explained below.
Position trading or Investing
In Position trading, you invest in a financial asset for weeks or months or years and wait for the asset to give you profits. The people are aware of this type of trading from older times. The Investments involved in Position trading is common in Financial markets like stock exchanges, bond markets i.e., in the capital market.
Position trading requires low trading activity. It is for you to follow the movements of the price value of your financial asset regularly and sell it when the value peaks, to make good profits. Fundamental analysis works best for this type of trading. For this type of trading, you need not invest any separate time for trading. Reading and following the news about your financial assets is good enough.
A good example of Position trading is Investing in Initial Public Offerings (IPOs). This type of Investment can even be transferred as an asset to your upcoming generations.
Swing trading
In swing trading, you hold your financial asset for a medium time period i.e., for some days or weeks. You need to spend a few times a week to be a successful trader in swing trading. It can be carried out in various types of financial markets such as in the Capital market, Money market and also in the Over-The-Counter(OTC) market.
Fundamental analysis and Technical analysis both are essential for Swing trading. A little high trading activity is required in Swing trading than Position trading
Day trading
In Day trading you own your financial asset only for a day. You buy and sell your asset the same day. You need to keep track of the market movements a few times a day or you can use the Stop order option to close your trade.
Technology in trading is developed a lot that you are not required to follow the market movements so frequently. Technical analysis works best for day trading.
You may even become a full-time day trader and can increase your profits by increasing your trading volume. Trading in different types of assets is a more common type of Day trading style in Over-The-counter markets. High trading activity is required in day trading.
Scalping
In Scalping, you hold a trading position for seconds or even for minutes. This trading style requires high skills, and you should master in technical analysis to profit from scalping.
In each trade you succeed, there will be only small profits. You increase your profits in scalping by increasing your trading volume. Extremely high trading activity is required.
Over-The-Counter markets are the ones which provide you with such trading. These kinds of trading platforms are fully automated and programmed to process the trade that can happen even in a few seconds.
Which trading style will suit you the best?
A Trading style should be selected by you according to your trading plans. Position trading and Swing trading styles work best for people who have some other profession, and they indulge in trading side by side. Day trading and Scalping trading styles need more skills in trading and the person should master Technical analysis to profit much from such kinds of trades. Day trading and Scalping are even done as a profession separately and people involved in other professions also indulge in such Trading style.
So, deciding your trading style depends on your circumstances and you are the one who can perfectly decide which Trading style suits you the best. Experiment on different types of Trading styles and analyse which trading styles you are comfortable with. You can have one type of Trading style or use a combination of them. Whatever the Trading style it might be, decide such a style customized for you which gives you good profits.
If you find it difficult to choose your Trading style let us help you. You can click here to ask your questions and connect with our Trading Critique Experts for free. You can also ask your doubts in the comments section, which will also be answered by Trading Critique experts.
In a Nutshell
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Reference
- Book Name: Scalping Trading Top 5 Strategies: Making Money With the Ultimate Guide to Fast Trading in Forex and Options, Author: Andrew C. Ellis, Publisher: Createspace Independent.
- Book Name: Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves, Author: Kathy Lien, Publisher: John Wiley & Sons.
- Book Name: Fundamental Analysis and Position Trading: Evolution of a Trader, Author: Thomas N. Bulkowski, Publisher: John Wiley & Sons.
