The Different Styles of Trading

0
118

As an investor, one has the opportunity to take on different trading styles, depending on the time frame in interest. Regardless of the trading style or time frame, the adage still holds – buy low, sell high.

Position trading deals with a long time frame where the holding period can last from months to years. Given the long-term nature of this trading approach, traders tend to ignore short-term fluctuations, and instead use weekly and monthly price charts to evaluate the state of the market.

Swing trading is a short-term form of trading that ranges from a span of days to weeks. Through this approach to trading, traders usually prefer to use price action and technical analysis as opposed to fundamentals and exit the trade when the profit target has been hit. One advantage of this form of trading is that constant monitoring is not required due to the short time frame that swing trading follows.

Day trading is another form of short-term trading but within the span of a day. These traders seek to take advantage of short-term fluctuations in the market and hence must constantly monitor the market. Scalp trading is a form of day trading where investors look to capitalize on the smallest of fluctuations within the time span of minutes to seconds to garner a profit.

An even more extreme form of short-term trading is high-frequency trading. In this form of trading, traders must use algorithms to analyze and conduct orders across multiple markets. In this approach, speed is the key to success.

LEAVE A REPLY

Please enter your comment!
Please enter your name here