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Different Types Of Trading Strategies
When trading it is important to find the most suitable trading style one that can fit your personality and lifestyle. The right trading style can actually be an important element for your success as a trader. In fact one of the most common mistakes traders make is that they choose a trading style at random, and if it is not considered in relation to their personality, lifestyle and goals, it could end up leading to unsuccessful trading. Let us discuss some trading styles in more detail.
a. Day Trading
This type of trading is characterised by several trades per day. Traders engaging in this style of trading tend to spend a considerable amount of time per day analysing charts as well as using various instruments so as to trade on shorter time frames, and hoping to increase their trading opportunities. In such trading the trader typically enters and exits trades within a span of a few hours.
The advantages of day trading are that often many signals are given off daily, and in case a trade is missed there will be numerous other entry signals to avail from. This style of trading is also ideal for those who do not like to wait for trading signals.
However there are also disadvantages to this style of trading, such as the need to be able to cope with emotions and avoid the urge to trade only as a result of revenge or take up a gambling approach.
b. Swing Trading
In this type of trading there are typically fewer trades with high time frames. Such traders aim to catch substantial market swings so a to ride trends for a longer period. Typically they hold on trades for a number of days or even weeks.
You need to be vry patient for this type of trading as signals can take several days to manifest themselves. Also, once you’re in a trade you will need to have complete trust in the system and in your analyses. Having said that, swing trading is not as hectic as day trading and trades are more planned.
c. Scalping
This is a common trading style, where traders have several trades per session, but they typically hold on to them for a very short period, ranging from minutes to just seconds. To be a scalper you need to have a strong character and be emotionally stable to avoid overtrading and be able to deal with losses. Timing is very important in this trading style.
D. Automated Trading
With an automated trading strategy the trades will take place automatically through the system. Traders will only be responsible for monitoring the performance of the system. While this option appears easier it is important to point out that to create such a system one would need to have advanced programming skills and trading experience, and while there are some software packages that can be bought it is not always an ideal option. The best part of this system is that there is no need to worry about the impact of emotions on trading decisions. It can also be great with regards to time saving.
a. Day Trading
This type of trading is characterised by several trades per day. Traders engaging in this style of trading tend to spend a considerable amount of time per day analysing charts as well as using various instruments so as to trade on shorter time frames, and hoping to increase their trading opportunities. In such trading the trader typically enters and exits trades within a span of a few hours.
The advantages of day trading are that often many signals are given off daily, and in case a trade is missed there will be numerous other entry signals to avail from. This style of trading is also ideal for those who do not like to wait for trading signals.
However there are also disadvantages to this style of trading, such as the need to be able to cope with emotions and avoid the urge to trade only as a result of revenge or take up a gambling approach.
b. Swing Trading
In this type of trading there are typically fewer trades with high time frames. Such traders aim to catch substantial market swings so a to ride trends for a longer period. Typically they hold on trades for a number of days or even weeks.
You need to be vry patient for this type of trading as signals can take several days to manifest themselves. Also, once you’re in a trade you will need to have complete trust in the system and in your analyses. Having said that, swing trading is not as hectic as day trading and trades are more planned.
c. Scalping
This is a common trading style, where traders have several trades per session, but they typically hold on to them for a very short period, ranging from minutes to just seconds. To be a scalper you need to have a strong character and be emotionally stable to avoid overtrading and be able to deal with losses. Timing is very important in this trading style.
D. Automated Trading
With an automated trading strategy the trades will take place automatically through the system. Traders will only be responsible for monitoring the performance of the system. While this option appears easier it is important to point out that to create such a system one would need to have advanced programming skills and trading experience, and while there are some software packages that can be bought it is not always an ideal option. The best part of this system is that there is no need to worry about the impact of emotions on trading decisions. It can also be great with regards to time saving.