Personalities & Lifestyle: Finding the Right Trading Style for You
Trading is becoming increasingly popular nowadays. However, when starting out, you need to define which approach you will take to enter the financial markets. Trading is so versatile that it’s not about adapting to the markets, but rather finding the right trading style that will match your personality and lifestyle. Each trading style has its own unique approach, risk tolerance, and strategy.
What is a Trading Style?
A trading style is defined by the way you trade the markets. How often you look at charts, how many positions you take, and how long you’ll hold them are all factors that contribute to your trading style. In this blog post, we will dive into the most common trading styles and their characteristics.
The four main trading styles are position trading, swing trading, day trading, and scalping.
Position Trading
If you’re just starting your trading journey, position trading is not a common style. This type of trading requires you to learn about both technical and fundamental analysis, which requires economic and financial understanding.
- Position traders typically hold their positions for months or even quarters, as the big and primary trends are commonly driven by the macroeconomic environment.
- Profits are made from big market moves, normally more than 10%.
- When trading futures, CFDs, and other derivatives, position traders pay a lot of fees for holding their positions.
- The best timeframes for technical analysis and decision-making are 1 month, 1 week, and daily.
In terms of personality and lifestyle, position trading won’t require much of your time looking at charts. Position traders often check their positions once a week, which allows for a more relaxed lifestyle and the ability to dedicate more time to other jobs, family, travel, or your own startup.
Swing Trading
Swing trading is a popular trading style. If you’re just starting out in trading, I recommend that you begin with swing trading. This approach will help you develop the patience required to analyze medium and high timeframes, which have less noise and can help you understand the main dynamics of price action. You’ll need to learn fundamental analysis, but since you won’t be exposed to the market as much as position traders, your decision-making process won’t be as influenced by fundamentals.
- Swing trading involves taking only a few positions throughout the month, with trade setups lasting between 1 week to a month.
- The goal is to profit from market moves of 5% or more.
- Decision-making is based on a mix of fundamental and technical analysis.
- The best timeframes for swing trading are weekly, daily, and 4-hour charts.
- Trading fees for holding positions are also high.
In terms of personality and lifestyle, swing trading requires you to look at charts at least once per day. This is a relaxed approach to the markets since you’re trading medium timeframes that allow flexibility between trading sessions. You can use the rest of your time to learn new skills, spend time with your family, work a normal job, or pursue hobbies.
Day Trading
This trading style is commonly referred to as intra-week trading. It can be a good option for beginners since it allows them to avoid lower timeframes that often have more noise and can be confusing. While it requires less fundamental and macroeconomic understanding, it’s important to stay aware of news events throughout the week.
Here are some key points:
- Trade setups often last for days or weeks.
- Positions are often closed before the weekend to avoid gaps and OTC market movements.
- The goal is to profit from market moves of 1% or more.
- Being aware of news events is essential for risk and trade management.
- The best timeframes are weekly, daily, and 1 hour – 30 minutes.
In terms of personality and lifestyle, day trading requires constant monitoring during the most important trading sessions (London, New York, and Tokyo). This means that you need to be available to look at charts throughout the day to manage your trading positions. If you’re day trading, you’ll likely spend most of your time trading and doing research.
Scalping
Scalping is considered the most difficult trading style. It requires total focus on the markets on a daily basis, and there is a lot of noise on lower timeframes. This trading style is only recommended for experienced traders, as trading on lower timeframes and taking multiple trade setups throughout the day requires top-notch risk management tools and a psychological approach.
Here are some key points to keep in mind when scalping:
- You will trade several positions throughout the day and won’t hold positions overnight.
- Tick charts can be used instead of time-based charts.
- Risk and trade management skills are essential.
- The best timeframes for scalping are daily, 1H, and 1min.
Scalping requires good time management skills, as scalpers usually only trade for several hours during the main trading sessions. Since they close their positions at the end of the day, they don’t have to look at the market until the next day. It is important to manage yourself well under pressure and work on your psychological balance on a daily basis.
Summary
It’s extremely important for you to define your trading style based on your lifestyle and personality. By doing this, you’ll be closer to being profitable in the long run and you’ll enjoy trading much more.
🐦At The Birb Nest, we have a dedicated team of Trading Analysts who are available 24/7 to help you reach your trading goals and learn. We’ve already shared several educational materials inside our discord that you don’t want to miss.
Don’t hesitate to reach out if you need any guidance!
If you want to participate for $100 in $BTC and a FREE Hoodie follow the steps below 👇
