The trading style depends on many factors, among which personal preference and the availability of funds will probably be determining. It is in the trading style that the essence of a trader, his character and inclination to risk are best revealed. It is very rare for traders to work exclusively in one style, but everyone has certain inclinations. According to Bytrend.com analysts, almost all variations of trading strategies can be summarized in four main directions based on trading speed.
The first and most dynamic is scalping. This method of trading involves a constant search for new opportunities for profitable deals and full immersion in the market situation. The essence of scalping is in responding to the slightest market movement: opening and closing a position can take literally a few seconds. As soon as there is a profitable movement for a trader, the position is immediately closed and the profit is fixed. Thus, the income in a single transaction is very insignificant, but this is offset by a large number of transactions per working day. As a rule, scalpers use large leverage and trade on 1 and 2 minute timeframes on several positions at once.
This activity seems deceivingly simple and, judging by the feedback from Bytrend’s (www.bytrend.com) clients, attracts a lot of newbies. Scalping places very high demands on a trader in terms of self-organization and concentration. In addition, there is no place for excitement, all actions must be accurately calculated and verified like the movements of a surgical scalpel (hence the name). The main difficulty for a scalper is high transaction fees that can “eat up” up to 70 percent of a trader’s daily profit. Now the so-called robots are competing with scalpers, capable of making hundreds of transactions according to specified algorithms during a trading session.
The next area is day trading, which can be described as «slow scalping». Here, all events also occur within one trading session, however, traders hold positions longer and use higher timeframes. Traders who prefer this trading style, as a rule, have a clear plan according to which they build their trades throughout the day. On the one hand, they avoid the risks associated with the transfer of positions to the next day, on the other hand, they avoid unnecessary emotions, so as not to make rash movements.
Fans of this style of trading follow the news closely and have a lot of respect for technical analysis. They are of little interest to global trends, since all events fit into the framework of one session. And then — a new day and new trends.
Swing trading is the most convenient for beginners, it is with this strategy that Bytrend clients are recommended to start. In this case H4 and D1 timeframes are used and, on average, a little more than ten positions per month are opened. There is time to reflect, deal with the current situation and make an informed decision. When working in this style, acquaintance with the market occurs most organically, without undue stress and rash actions leading to losses. And such actions, as you know, can discourage newbies from active trading for a long time.
The main principle of swing trading is to understand the general trend and capitalize on the competent use of peaks and troughs, while it is important to correctly determine the swing highs and lows for buying and selling short and long positions. As in the previous case, fundamental technical analysis comes to the rescue. Traders using this strategy prefer volatile markets with a high probability of powerful price movements.An option for the most seasoned traders who prefer to see the situation as a whole is positional trading. In fact, this is very close to investing, but unlike the buy and hold principle, there is still a place for short positions.
Positional trading involves a long time period for making deals: some positions can be held for years. Work for the future comes to the fore, rather than the expectation of immediate results. In this case, it is very important to correctly analyze the global trend and clearly define the entry and exit points. For positional players, Bytrend provides a dedicated team of analysts to help you comprehensively assess the market environment.