Type Of Trading Styles You May Not Be Aware Of.

Type Of Trading Styles You May Not Be Aware Of.

For a new or experienced trader, there is something that bugs many are definitions for styles of trading as described in many places. This might be a good time you know what are those different types of trading styles if you are not aware of it till date. Knowing this is very essential if you are talking with an experienced or professional trader as they like to make it simple while talking about the trading styles one follows. This will also be beneficial if you want to learn different strategies, with different styles, there are different things to be considered for following and becoming successful. Knowing common styles of trading will make your learning curve very short so you can start trading and making money without losing your valuable time in searching for what these styles mean and what you should follow.

Depending Upon the timeframe and order completion there are four types of trading styles. These are :

Timing The Market For Scalping

Scalping:

It represents the shortest-term trading on which the order is completed within minutes or even seconds depending upon the movement in the market. Scalpers believe that it’s easier and less risky from a market volatility perspective to catch and profit from small moves in prices rather than from large moves and due to quick trades with smaller profit gains, there are numerous trades throughout the day for accumulating profit, it requires strict discipline which is why it’s popular among professional traders.

In order to perform scalp trading the market needs to have tight spread (Difference Between Buy & Sell Price) and high liquidity. This is also the reason behind scalp trades happening majorly in peak hours of the market when the spreads are tighter and liquidity is very high. As this process requires intense research and study scalpers tend to trade limited pairs.

Analysing The Chart Before & After Entering A Position.

Day Trading:

Similar to Scalping Day Trading is also the short term trading style where trade is completed in a single day without holding a position overnight. In this style there may be a max of two-three trades in one day. This process requires sufficient time to analyze the markets and frequently monitor positions throughout the day. Similar to scalping, traders who follow day trading rely on frequent small gains to build profits. They don’t want to risk the position with large overnight movements so all the positions are closed at the end of day irrespective of profit or loss.

Day Trading styles is best practiced with following Oscillators & Moving Averages. A day trader doesn’t win all the time they try to win 51% to 60% of their trades but they follow such a strategy where they make more on their winners than they lose on their losers. Losing is limited to a fixed percentage by calculating the risk and also using the trailing stop at comfortable points is among one of many strategies.

Swing Trading Strategy.

Swing Trading:

As opposed to Scalping & Day Trading Swing Trading can be classified as short to medium term depending upon the time frame the position is held. The swing traders hold the positions for few days to few weeks. Positions are held over a period of time, due to which traders don’t need to constantly monitor the charts and their trades throughout the day. Persons involved in other functions and jobs but want to reap benefit of the market to perform these types of trades.

Some strategies that are followed by swing traders are trend following system, breakout trading, etc. As this style runs for a comparatively long time one needs to maintain a good margin if they don’t want to lose a winning trade because of short term volatility like news and events.

Some Swing traders follow counter trading of trend strategy with the support of indicators like RSI oscillators an example of which is given here.

Long Term Position.

Position Trading:

This is a style of trading in which the position runs for several weeks, months, or even years before closing or completing it. The position trader often looks at longer-term charts — monthly, weekly, and maybe daily bars for the smallest timeframe. They are focused on long-term price movement, looking for maximum potential profits to be gained from major shifts in prices.

You might be considering what is the difference between an investor and position trader or are they the same? No they are not the same there is a difference between them. An investor is a person who buys an asset usually with a motive of earning a dividend yield and price appreciation during the time that they hold the stock. Whereas, the position trader is more focused on the overall price move. They want to catch the major trend but get out of the stock when the trend reverses. They also use stop losses similar to other traders and they don’t sit in a losing position as investors may at times.

These types of trading style is suitable for persons with other primary work or jobs similar to swing traders but with lot less time to watch the market than swing traders. They might analyze many economic and political factors before entering and during the position is running.

I Hope This post helped you gain some knowledge about trading styles and habits which might help you formulate and research strategy as per your requirement. As always please subscribe to my email list and follow our social profiles in order to be first to know about published posts. Also, share as much as you can if you want me to start and release analysis reports about different blockchain assets. Thank You.