Supply and Demand Strategy - Choose Your Best Trading Style

Choose Your Trading Style

There are four main styles of trading: scalping, day trading, swing trading and position trading. The difference between these styles is based on the length of time that traders keep their trades open. Scalping traders are only holding their positions for a few seconds to a few minutes. Day traders keep their positions for anywhere from a few minutes to hours. While swing traders hold their positions for a few days. Finally, position traders are holding their positions for anywhere from a few days to several years.

Choosing the right trading style that best suits your personality and your lifestyle can be a difficult task, but it is absolutely necessary to your long-term success as a professional trader.

Scalping

Scalping is very rapid trading style, and scalpers often make trades within a very short time. This trading style is very demanding and traders need to make immediate trading decisions and act on it without second guess.

Being a successful scalper requires focus, concentration and most importantly stress management. Because they spend a great time in front of their screens looking for short and quick opportunities, they need to be able to manage their level of stress and keep calm no matter what the outcome is.

Day Trading

Day trading style is suited for those who like to open and close trades within the same day. They are often unable to sleep at night knowing that they have an active trade that could be affected by overnight price movements.

Swing Trading

Swing trading is compatible with people that have patience to wait for a trade and be able to hold it overnight. So it is not suitable for those who would be nervous holding a trade while they are away from their computer.

This trading style requires a large stop loss and the ability to keep calm when a trade is going through retracements.

Position Trading

Position trading is the longest-term trading and often has trades that last for several years. Position trading style is more suitable for the most patient, least excited traders and has a large capital to begin with.

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.

One of the biggest mistakes that new traders often make is to change trading styles at the first sign of trouble.

Constantly changing your trading style or trading system is a sure way to catch every losing streak. 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.