Finding the suit’s trading style may be like looking for a partner in life, it’s hard to find one. but if you have found a suitable one, life becomes comfortable and full of peace.
Likewise in trading, finding the best trading style requires experimenting with one another. One trading style may suit another trader, but it may not suit us. Finding a trading style is choosing that leads us more comfortable for trading.
Contents
What does trading style mean?
Because here we are talking about trading styles in forex, the definition of forex is different from the definition of company trading style. The definition of the trading style in forex trading is how traders approach trading.
So there are trader styles that like fast trading and there are those who prefer to be more relaxed. Trading style is primarily concerned with how long a trader is in the market when a trade is made. Some traders like a few minutes, hours, days, or a few months.
This is in stark contrast to the trading style of the company. Which is a company that has a registered brand name, but that company sells with several websites with different logos and styles. However, it still includes the registered company brand.
Trading styles in forex
We are back again to the trading style in forex. Why can each trader choose their own trading style? The answer is that this is closely related to the trader’s psychological condition.
Traders who tend to be unable to contain themselves from emotions, do not fit the short trading style.
In forex, find a trading style because every trader has their own character, both in terms of personality, talent, and psychology. That’s what causes differences in trading approaches whether trading stocks, forex, gold, indices, or others.
Types of Trading style
In general, there are 4 types of trading styles that are known to traders.
Scalping trading style
Scalping is a short-term trading style, often in seconds or minutes. Scalping is a very active trading style, with a small profit target. This style of trading is usually in high frequency. Scalping trading generally targets liquid markets and tends to be less volatile.
Pros
- Traders will see profit and loss results even in minutes.
- Don’t wait for a long period of time to reach the target.
- Can make transactions dozens of times even hundreds of times a day.
Cons
- Can cause high emotional stress.
- Requires expertise to choose market conditions.
Day Trading
This is a trading style in which traders take advantage of daily price fluctuations. Day trading traders will buy and sell on the same day.
In the day trading style, there are no trading positions are held until the next day. Day traders often make trades in a matter of hours, but it is also possible in minutes. Day traders are usually reluctant to open positions until the next day because it can make them unable to sleep well.
Pros
- Work at a swap broker, no overnight swap fees.
- More relaxed and don’t always have to focus on the chart.
- View daily profit and loss.
Cons
- Requires expertise in reading market swings.
- On the sideways market rarely reach the target.
Swing Trading
This is a trading style that takes advantage of price fluctuations over a longer period. Target profit swing trader larger, usually in more than one day even in a few weeks the target will be achieved.
Swing traders try to take advantage of up and down price swings on longer timeframes to chart a trading plan for several days.
Pros
- Traders don’t have to be in front of the monitor all the time, they can come back to check on another day.
- For busy traders, this trading style is for them.
- It’s not too stressful because swing traders only open one or two positions until they are all done.
Cons
- Takes a longer time to be able to see profit and loss.
- Requires expertise in processing fundamental analysis which often affects the long term.
Position trading
This is a trading style with an even longer timeframe, ranging from weeks to months. It is even said that traders who hold trading positions for up to one or two years can still be called position traders.
Position traders usually have large funds in their trading accounts to be able to withstand price fluctuations in the long term. This requires a tremendous amount of patience because they have to get the really best price.
Pros
- Traders can carry out other business without having to always see the latest price details, they can check once a week or a month.
- Perfect for traders with a set and forget mindset and traders who are super busy.
Cons
- Requires larger funds to withstand short-term price fluctuations.
- It takes extra patience to wait for long-term lows and highs.
The trading style for beginners
Which of the four trading styles is the most suitable for beginners? In this case, it depends on their interest in choosing a trading style, because each has its advantages and disadvantages.
Scalping although short-term trading is very attractive to collect profit with more transactions. But the fact is that beginners still lack experience in analyzing and determining the best prices for entering and exiting.
Beginners can adjust to their character in choosing a trading style. And the important thing is to take advantage of the demo account to really learn.
Beginners can also experiment with other trading styles, such as day trading. However, it is recommended for beginners to focusing one trading style and practice for several months before they take another trading style.
It’s also good to record all progress in a trading journal to measure, compare one trading style to another, as an evaluation.
What is the best trading style?
You’ll find a wide variety of trading styles that work best when you start a search. But the best trading style is determined by you.
Which one fits your style. Maybe you are an investor trader who prefers to invest rather than trade independently. In this case, the best options are Copy trading and PAMM trading.
For those of you beginners, you may get some insight into the best forex trading strategy at Zulutrade. Or they can take some useful tips on Investopedia.
Tips on how to find a trading style that suits you
Continuing your interest in the world of forex trading, it is important to find a trading style that suits you. How to find the right trading style, maybe the following tips can help you determine the best and suitable for you.
Get to know your own personality
Trading style is closely related to trader psychology. Knowing your personality can help you determine the right style. Ask yourself, do you prefer to see short-term or long-term results.
If you prefer to see the results of profit and loss in the short term, then you can apply scalping and day trading. But if you are comfortable with seeing profit and loss trading in the long term, then swing trading or position trading can try it.
Try trading style
When you have found your personality and determined a trading style that you are interested in. The next step is to test your preferred style..
In testing this trading style it is also good if you do.
- Learn the trading strategy that suits your choice, if you like scalping, learn how to work effectively with a scalping strategy.
- Take your time, you need to do in-depth research to test trading strategies.
- Keep trading notes or journals as reminders that you can revisit someday for evaluation.
Recognize mistakes and create new rules
ALmost beginners find it difficult not to avoid repeating the same mistakes. But recognizing mistakes can minimize the desire to repeat mistakes making them less effective for trading. Create new rules so you don’t repeat the same mistakes.
Start with small capital
Indeed in the forex trading market, there are billions of dollars circulating in the forex market. But beginners should start with small capital.
The forex market is very cruel, it will give you no mercy even if you start with big money if the trader goes against the trend. The golden rule is to spend only those who are ready to take risks. If you are ready with $100, now many retail brokers allow you to start with small-budget trading.
Measure your ability
When traders want to become profitable traders,in an analysis accuracy of more than at least 60% is required. If on average your trading results in more losses than gains, then you should re-learn your trading strategy.
Alternative investment, copy trading, or PAMM
In your experience, probably you felt the hard work of learning to trade to become a master trader. But the fact is that they often fail, other alternatives for forex investment are copy trading and PAMM trading.
Copy trading is a brokerage service that allows other traders to copy trades from other traders. Not all brokers support copy trading, but you can find copy trading on Zulutrade.
Or another alternative is PAMM investment, you just open an investment account and a funds account and then choose a manager you trust.
Which trading style is most profitable?
This becomes a difficult question actually, because after all forex and CFD trading is risky. What is produced today does not guarantee that you will get the same tomorrow.
However, from our observations, a profitable trading style also depends on the selected asset or trading instrument.
Day trader in the Stock trading most profitable trading style
For example, in stock price movements which tend to be easier to trend in a day, a suitable trading style is day trading. For this, it is important for stock traders to learn about trading volume to determine open and exit.
In addition, the price and daily range are also important to be a concern for day traders, so they can use the price information to determine the profit target to be achieved.
Then about volatility, this is also important for day traders stocks, low volatility makes it difficult for them to make profits.
Scalping the most profitable trading style in forex
Short-term price movements in forex often form up and down waves in a matter of minutes. This provides an opportunity for scalping traders to capture profits with small targets but with higher transaction volumes.
Some brokers provide traders opportunities in scalping contests. And in one trading contest, where the winner of the contest is a scalper trader, it indicates that scalping is widely used in forex.
But it is important for traders to know whether the broker supports scalping or not. There are brokers who will cancel profits if the trader opens and closes positions in less than five minutes. In this case, a true ECN broker is more recommended.
Swing and position trading best for set and forget trading strategy
Some traders may only make forex trading an investment hobby, they still run other businesses for their main focus. The swing trading style and position trading are perfect for those who like the set and forget strategy.
They can analyze the market within a long timeframe and create a measurable trading plan. After that, he could go forget the order for a moment and check back the next day.
Lifestyle trading bot
There are traders who have a trading lifestyle with trading bots. They create or search for trading bots that are considered profitable and then install them on the trading platform and run with VPS.
This seems to be a lot of fun with the marketing language of making money from forex on autopilot. However, it must be understood that not all trading bots are profitable. In this case, the trader should really do thorough research before deciding to buy a trading bot.
Due to the huge forex industry, there are some people offering fantastic results but just scams.
Final thought
It is an important note that trading style is closely related to trading time. While trading strategy is closely related to how traders make trading decisions. Some use indicators, some use news trading.
Choosing a trading style is to suit the personality of the trader and make them comfortable by executing trades based on money management and risk management.
Note: this article is for personal information and opinion only, it does not constitute investment advice. Forex and CFD trading is a complex and risky market. Each investor is responsible for their investment.
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