When it comes to trading, it’s never a one-size-fits-all approach. Every trader has a different lifestyle, preferences, and financial goals, and it’s important to find a trading style that perfectly suit those needs. In this blog article, we’ll take a closer look at the four major trading styles and all details about them.
Scalping Trading – getting in and out of the market in the matter of minutes.
Scalping is a popular trading style where a trader takes a position and holds it for just a few minutes or hours. Scalpers typically aim to profit from small price movements in the market, and they often trade on lower timeframes, such as the 1-minute or 5-minute charts. Scalping trading strategy requires a high level of focus, concentration and discipline, as traders need to make quick decisions and act fast. Scalpers usually use price action, combined with indicators to pick their trading opportunities.
It’s also important to note that scalping can be more time-intensive, as traders need to be present and focused during the entire trading session. Usually, scalpers will trade during the whole London or New York session and are required to stay in front of their screens. Therefore, if you prefer a more active trading style and you have four hours of time to dedicate to trading per day – scalping could be for you. And don’t forget – you need strong nerves for that!
Day Trading – capitalizing on the intraday price action.
Day trading slightly resembles scalping, as traders hold positions for a short period of time, typically a few hours or less. However, day traders usually trade on higher timeframes, such as the 15-minute or 60-minute charts, and they often analyze their charts just once per day. Their analysis starts from the higher-timeframes, such as the 4-hourly and Daily and then they utilize the lower timeframes to get their sniper entries.
Day traders aim to take advantage of intraday price movements, and they often use technical analysis to identify trading opportunities. If you do not like the lowest timeframes (1-5 minute), but you love to be looking at the market from an intraday perspective and still close your trades at the end of the day – then day trading is your pick!
Swing Trading – catching the weekly move.
Swing trading is a trading style where traders take positions and hold them for a few days to a few weeks. Swing traders often analyze higher timeframes, such as the weekly, daily and 4-hour charts, and they use technical and fundamental analysis to identify potential trading opportunities.
Swing traders make profit from medium-term price movements and are willing to hold positions through short-term market fluctuations. Swing trading requires less time and attention compared to scalping and day trading, making it a good fit for those with busier schedules. This is perfect for traders working 9-5, as swing trading is the most famous with its “set and forget” approach. You can analyze your charts in the evening, set your trades and forget about them.
Positional Trading – no time to monitor charts at all? Try this!
Positional trading is a trading style where traders take positions and hold them for weeks, months, or even years. Position traders often analyze the highest timeframes, such as the weekly, monthly, quarterly charts and they leverage their fundamental analysis to identify potential trading opportunities.
Position traders aim to profit from long-term price movements and are willing to hold positions through medium-term market fluctuations. Positional trading requires the least amount of time and attention compared to other trading styles, making it a good fit for those with limited time but still want to put their money to work. Essentially – you invest in the currencies you think will appreciate.
So, which trading style should you pick?
Many traders make the mistake of trying to fit their lifestyles around their trading. What ends up happening is they get another full-time job. In the beginning, it’s very important that a trader asks himself: “Why am I trading?”. The most common response is “freedom” – mostly financial, time and location freedom. So, do you think having a nother 9-5 trading job will help with that? Not really.
Picking a trading style that fits your lifestyle is crucial because it allows you to trade in a way that works for you, rather than trying to fit your life around your trading. Trading is demanding, both mentally and time-wise, and choosing a style that aligns with your schedule and preferences can help you maintain consistency and discipline, which are crucial for long-term success. Pick a trading style that fits your lifestyle and still allows you to do the things you love and do your other job properly. This way, you will be more likely to stick with your trading strategy and avoid burnout or stress.
It is important to test out all the trading styles! Whether you prefer a more active approach like scalping or day trading, or a less active approach like swing trading or positional trading, there’s a trading style that suits you. You can even have a combination of styles – a lot of our traders are scalpers, but they also run swing trades in parallel. Or maybe you decide to take a vacation – then you turn from a day trader into swing trader.
It’s important to do your research, experiment with different trading styles, and find the one that works best for you. Traders, please remember, trading should fit your lifestyle, not the other way around.
Let us know which trading style you prefer and why.