Trading styles can be molded to fit a trader’s time restrictions, profit goals, and personal strengths.
While most traders share the same goals, they achieve these goals using a variety of different trading styles.
There is not one trading style that is better than any of the others.
What typically separates the trading styles is the length of time you intend to be in a trade, the timing of your entry, and in some cases, the frequency of the trades.
There are four main styles of trading:
- Day trading
- Swing trading
- Position trading
The difference between the styles is based on the length of time that trades are held for.
- Scalping trades are only held for a few seconds, or at most a few minutes.
- Day trading trades are held for anywhere from a few seconds to a couple of hours.
- Swing trading trades are usually held for a few days.
- Position trading trades are held for anywhere from a few days to several years.
The table below provides typical timeframes you would expect to see a trader using.
Choosing the trading style that best suits their personality can be a difficult task for new traders, but is necessary for their long-term success as a professional trader.
One of the biggest mistakes that beginner traders often make is to change trading styles (and trading systems) at the first sign of trouble.
Constantly changing your trading style or trading system is a sure way to blow your account.
Once you are comfortable with a particular trading style, remain faithful to it, and it will reward you for your loyalty in the long run.
Choosing a trading style requires the flexibility to know when a trading style is not working for you, but also requires the consistency to stick with the right trading style even when it is not performing optimally.