Traders are like snowflakes: no two are exactly alike. Some prefer the fast pace of day or scalp trading, where others prefer slower-paced approaches like swing trading or position trading.
To find the most solid trading strategies for you, it’s important to figure out your preferred trading style. In this infographic, you’ll learn some of the key types of trading. Which style suits you best?
Table of Contents
Day Trading
Day trading refers to short term trades where you enter and exit a trade within the same trading day.
Day traders use technical analysis to find and exploit intraday price fluctuations. To try to maximize profits and minimize losses, you’ll typically use a profit target and set a stop loss.
Due to the short duration, large price moves are uncommon so you’ll rely on frequent small gains to build profits.
Swing Trading
Swing trading strongly relies on technical analysis and price action to determine entry and exit points.
Ultimately, you’re looking changes in corporate fundamentals that can cause swings in price that will allow you to claim a reasonable profit. So a swing trade could be as short as a day or two, or you might take a position for several weeks or even in some cases months.
Swing trading doesn’t require constant monitoring, so it’s a great style for traders with busy schedules who are unable to trade all market hours.
Scalp Trading
Scalp trading is very short term, with positions that might be held from seconds to minutes. No overnight positions!
With scalp trading, a trader might make dozens or hundreds of trades per day in an attempt to “scalp” a small profit from each trade by exploiting the bid-ask spread and targeting small intraday price movements.
A scalp trader is probably the most constantly active type of trader during market hours, constantly buying and selling and letting small gains mount over time. It’s vital for scalpers to have access to low trading commissions.
Position Trading
Position trading is like the slow but steady approach to trading.
Instead of relying most heavily on technical analysis, you rely on a mix of technical and fundamental analysis to located and take advantage of longer-term trends.
A position trader takes a “buy and hold” approach, and might maintain their position for months or even years, checking on weekly or monthly charts to get insight on how the stock, bond, or asset is responding to the given trend.
What kind of trading is most appealing to you? Why? Leave a comment and spark a conversation!
Resources:
https://www.investopedia.com/university/how-start-trading/how-start-trading-trading-styles.asp
https://www.investopedia.com/articles/trading/02/100102.asp
https://www.investopedia.com/terms/p/positiontrader.asp
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learned a little on the trading strategies
Day trading is the most attractive form of trading to me.
I’ve been studying for roughly 8-9 months (on and off) and day trading seems ideal as it’s an approach that is fast, seems reasonable if you come in prepared and put in the work before making the trade.
Swing trading also seems great though as I haven’t made a single trade, and having more time gives me less chance of making an impulsive mistake rather quickly.
Scalping… I’ve mentally blocked this out of my mind. I can only see myself doing this once in a blue moon, only when I become a successful trader. Just seems like a good way to lose hair, make my current hair grey, and get an early start on wrinkes everywhere. I get stressed even thinking about doing it.
Position trading doesn’t seem great as I’m in my early 20’s and don’t have a lot of capital. Maybe once I get enough capital, investing in one position per x amount of time would happen. Can’t see it happening anytime soon though, or even in the next 3-5 years.
Day Trading > Swing Trading > Position Trading > Scalping, imo (in terms of which seems likely for me)
I think im more of scalp trader in and out,get my.little profit..since im just starting why would i risk overnight trade i have no funds to back me up if i loose …im more a grt what i can n be out.mode for now..