The Trading process is usually based on short time periods; however the time phase varies from few minutes to months, depending on the style of trading that is used. Basically, there are four major trading styles that define the type of a trader. These are known as
•Position Trading Style
•Swing Trading Style
•Day Trading Style
•Scalp Trading Style
Position Trading Style
This style is related to the longest time frames. The trader can take months or even years to complete the trading process. Technical as well as fundamental evaluation is used in taking decision about this type of Trading style. In this type of trading, small changes are overlooked to keep on trading for long term. In other words, it is a kind of investment where traders wait for ideal condition to get profit.
Swing Trading Style
It is related to a specific trading style in which the trade is carried on for some days or weeks to get benefits of market movements. Swing traders get assistance from price action, technical evaluation and exit points. Trade is ended when a preset profit target is obtained.
Day Trading Style
It is related to a specific trading style in which positions are selected and closed within 24 hours.
Trade is ended by setting a stop loss or profit target, within a day. Technical evaluation is used to check the change in prices. Moreover, charts and indicators are also important in understanding the right position for trade. As the day trading style has only a few minutes or hours as time period, therefore it is uncommon to expect great variation in price. Actually, day trading is a style is suitable for those who desire to get small earnings in shortest span of time. In this trade, positions can be changed any time, so the trader has to keep an eye on position continuously.
Scalp Trading style
There are many types of traders who select trading style according to their time management, requirement and nature of profits. Scalp trading is the most active type of trading. It is based on excessive purchasing and selling of positions. Stop loss and profit target are the two ways to end the trade. In this type of trade, positions are settled for a few minutes or even seconds. As this trade gives a small range of profit so the traders invest great amounts in each trade session.
How Traders Select a Style
As there are a wide range of trading styles, so traders are required to keep in mind the basic factors while selecting a style. It is true that factors affect on the trade selection. These factors are:
•Risk associated with a Trade
•Experience of Trading
•Available amount for investment
•Available time to check a trade
•Personality
You should consider these factors before choosing a Trading Style: you can even try different trading styles, to find the one (Or ones) that best fits your needs of course.
