Your trading must be tailored to your needs and preferences. That is why it is very important to get to know them. You should define what kind of trader you are and choose a trading style accordingly.
Generally, we distinguish four trading styles. The main difference between them lies in the duration of transactions made. And so we have position trading, where you keep a position open for a few days up to a few years even, swing trading where the trades remain open for a couple of days, day trading with the trades that last from a few minutes to a few hours and scalping with the positions opened for several seconds or a couple of minutes at maximum.
It can be quite a tough task to recognise the best trading style at the beginning. But this is a step you have to take in order to increase your chances of successful trading. This article is written to help you to choose a trading style that is the best fit for your personality.
Four main trading styles
As mentioned before, the transactions in position trading are held open for a long time. It can be even a couple of years. This is a reason why you should consider this style only if you are patient enough. If you get overexcited with 25 ticks in profit, it is rather not for you. In position trading, a target is frequently a few thousand ticks.
Another characteristic of position trading style is that it requires you to stay faithful to your opinion and not to listen to others. Your position will be open for a long time during which the market will change multiple times. Meanwhile, you will surely hear different opinions about the future economy. So you must not be influenced easily by what people say.
Swing traders open their transactions for several days. This also means the trades remain open through the night. Obviously, you cannot stay at your desk day and night. So you must accept that you will not follow the market all the time your position is opened. Do not choose swing trading if such a thought makes you feel nervous.
Moreover, usually, a large stop loss is set in this trading style. So you need to stay calm even when the prices are going against you. Patience and tranquillity are the skills demanded when you are thinking about swing trading.
If the previous styles do not feel like something for you because of not being able to monitor the situation in the market all the time your position is opened, day trading might be something for you. Here, you open transactions for a few minutes up to several hours. This means you will close the trade before you go to bed.
Consider a day trading if you want to keep track of what is going on with your position all the time. Similarly, when closing all the trades before night falls will allow you to sleep better and wake up well-rested.
Scalping commands quick decisions. The trades last just a few seconds or a few minutes at most. So you should be armed with a skill of fast decision-making and taking immediate action.
Furthermore, scalping may be something for you if you describe yourself rather as an impatient person. You want fast results and not to wait long hours to see the outcome. On the other hand, you have to be able to concentrate on one task exclusively so your decisions will be fast and accurate. The trades in scalping are often open in opposite directions. For example, the first one is long, the next short, and the next long again. So be fast and focused.
You have to get to know yourself to choose the appropriate trading style. But when you decide on one, do not give up too fast. This is an often mistake amongst the beginners. They change a trading style at the first loss. But such behaviour will take you nowhere. You will win and you will occasionally lose. It does not mean you have chosen wrong trading style.
Learn what are your strong and weak sides, select a trading style that fits your personality and stay with it. It will be viable over the long term.
I wish you good luck!