6 min read
Trading style is a reflection of your personality. Some people give their best in action and in high-pace environments, while others analyze the conditions thoroughly before making a decision, some love reading, while others have a more visual nature. One thing is certain: we are all different.
The three trading styles that we will describe here are very general, so every trader will be able to reflect. Establishing your trading style based on your personality is one of the key steps to becoming a consistent trader.
Those who adopt scalping consider the market in terms of seconds (or fractions of seconds) and minutes, considering the hourly or daily intervals. These traders analyze short-term price movements and seek lower profits or losses for several times during a trading session.
Scalping was the exclusive domain of pit traders, who worked on the spread of futures contracts. As you can imagine, speed is a fundamental advantage of this style of trading, which has become an exclusive prerogative of HTFs and algorithmic traders. At the retail level, scalping on the Forex market may seem complicated, especially at the beginning. However, it is possible to become a successful scalper using a disciplined approach and a solid strategy. Scalping is VERY active, traders must constantly monitor their screens to adjust settings.
Novice traders often tend towards scalping. This strategy offers them exactly what they want: action. Beginner traders, however, discover very quickly that scalping requires profound skills, knowledge and patience.
Traders who adopt swing generally maintain operations for a period of time ranging from a few hours to a few days. They believe that the price will move in a certain direction over a relatively short period, and that the price will reach their predetermined take profit or stop loss levels. Trading swing is a relatively active trading strategy. Depending on the strategy, it offers the possibility to set from 1 to 30 (or more) operations per week. Everyone's preferences determine the level of activity of the swing trader.
Swing traders generally use technical analysis and follow charts to identify entry and exit points. The reasons for opening or closing operations are mostly based on technical patterns. This is probably the most common trading style for Forex traders, especially those who are just starting out. This does not necessarily mean that professionals never adopt this style of trading and the strategies associated with it. The combination of some aspects of fundamental analysis and technical settings can help a great deal.
Position traders are the Forex equivalent of "investors". These traders focus on the long term and generally use some forms of macroeconomic analysis to establish their positions. Transactions are maintained for one month up to two years before being closed. Institutional traders often fall within this category, both for the amount of positions they maintain and for the level of sophistication they possess.
Macro hedge funds allocate significant resources to forecasting and economic analysis, and often manage long-term operations based on their research. This also allows them to manage larger positions, change positions over time and exit with greater profits. The biggest operations in history fall into this category, George Soros who "dug out" the Bank of England, the long US Treasury Bond, but also the "Big Short". All of these can be described as long-term operations based on macroeconomic factors.
This article does not represent an investment advice. Any reference to past movements or price levels is informative and based on external analyzes, we do not provide any guarantee that such movements or levels may reoccur in the future. In accordance with the requirements set by the European Securities and Markets Authority (ESMA), trading with binary and digital options is only available to customers categorized as professional clients.
GENERAL INFORMATION ON RISKS:
CFDs are complex instruments and carry the high risk of losing money quickly due to the leverage effect. 76% of retail investor accounts lose money when trading with CFD through this provider. You should make sure you understand how CFDs work and if you can afford to take the high risk of losing your money.
Source: IQOption blog 2018-11-26 14:24:19